UK Income Tax and Working Offshore

Do I pay National Insurance if working abroad?

If you are working abroad then you will have to pay NICs during your first year if you fall under the following categories: you are a UK resident, your employer has a branch in the UK and you were a UK resident in the time leading up to your new job.

Do I avoid UK tax if I am employed by an overseas company?

To avoid UK tax you must first become a non-resident, even if you are working in another country. UK residents are taxed on income worldwide, so you would have to apply and meet the non-residency requirements.

Can I become a non resident by working abroad?

Simply working abroad does not class you as a non-resident, it is dependent on how long you stay away from the UK and what kind of work you will be doing. If you have an employment contract that lasts for at least the duration of a tax year and you return to the UK sparsely, then you can achieve non-residence status.

Are UK bonuses subject to tax after I become a non-resident?

Normally any bonuses that are paid after your employment period has ended are subject to income tax. Even if the bonus is paid whilst you are working in another country it would fall under the banner of the tax year in which you were UK resident. If you are a UK resident but working overseas then any bonuses paid in your foreign job would also be taxable. An exception to this is a ‘termination payment’, although HMRC would ask to see proof.

What happens to UK share options if I become a non-resident?

If you were granted the share options whilst classed as a resident then you will have to pay income tax on any value increase upon exercising the options, even if you have become a non-resident since then.

Could there be a scenario where I am charged double tax?

If you are working abroad but are still classed as a UK resident then yes you could be double taxed. To avoid this, try and become a non-resident. Another option would be to look into a double tax treaty. Many countries have such agreements in place to avoid individuals receiving unfair tax bills.

Do civil servants face taxes when working abroad?

Civil servants working abroad would be exempt from capital gains tax as long they are already established as non-residents. However, they would be required to stay away for at least five years or the sum may be charged upon their return. In terms of income tax, if their work requirements took place abroad then they will be exempt from UK tax, BUT as a UK Crown servant their duties abroad would be classed as UK duties regardless of where they are conducted so in turn they would have to pay the income tax.