Country Information
General Information

How taxes work for a UK Expat Teaching Abroad

Unlike many countries the UK has set of clear defined rules you can apply to work out if you have to pay tax. Hoorah.

As with all these articles we’ll be keeping it simple (i.e. you only earn income from your job, you don’t have money coming in from abroad etc.) because we’re not tax professionals and tax gets complicated fast.

Whether or not you have to pay income tax in the UK on income earned abroad depends (as usual) on your residency.

  1. If you are a resident of UK then you do have to pay tax on it.
  2. If you’re not a resident then you don’t have to pay tax on it.

The three UK Residence Tests

The UK residency is very transparent (i.e. they’ll tell you the rules), but can still be complicated if you don’t fall into one of the first two boxes.

There are three residency tests.

  1. Automatically non-residence test
  2. Automatically resident
  3. Sufficient ties test.

You do them in order. So first you see if you fit the automatic non-residence test. If you don’t then you try and automatic residence test and so on.

Automatic non-residence test

  • If you spend less than 16 days in the UK in the tax year;
  • If you weren’t a UK resident in the previous three tax years, and spend less than 46 days in the UK in the tax year;
  • Have left the UK for full-time work abroad.

Automatically Residence test

  • If you spend at least 183 days in the UK;
  • If your only home is in the UK for more than 90 days, but only if the home is actually occupied for at least 30 days;
  • You’re in full-time work in the UK for a continuous 12-month period.

What counts as full time work?

35 hours a week on average over the tax year.

For the cases of the non-residence test you also can’t work for more than 3 hours a day for more than 30 days in the UK (in the tax year).

What records do they suggest keeping in case you need to prove it?

  • Written record of how you spend your time between UK & overseas
  • Diary/calendar/time sheet with sufficient detail (shows hours work, the nature of the work)
  • Breaks you had and times of leave
  • Employment contracts.

Sufficient Ties Test:

All the years referred to here are tax years.

Days spent in UK Resident in one the previous 3 years Non-UK resident in the previous 3 years
Less than 16 Always non-resident Always non-resident
16 to 45 Always non-resident 4 ties = resident
46 to 90 4 ties = resident 3 ties = resident
91 to 120 3 ties = resident 2 ties = resident
121 to 182 2 ties = resident 1 tie = resident
183 or more Always resident Always resident

So what are the ties? We’ve listed them below. If you meet any of the conditions then you have the tie.

Family tie:

If any of the following people are UK residents

  • Your husband, wife or civil partner
  • Your partner if you’re living together like a husband and wife or civil partners. This is a legal definition, explained here.
  • Your children under 18.

Accommodation Tie

  • If you have a place to live in the UK

AND

  • It’s available for you for 91 continuous days in a year (no gaps of longer than 16 days)

AND

  • You spend one or more nights there.
  • You spend 16 or more nights if it’s a close relative (parents, grandparents, children and grandchildren).

Work Tie

If you do more than 3 hours work a day in the UK for at least 40 days of the year.

90 day tie

If you’ve spend more than 90 days in the UK in either (or both) of the last 2 tax years.

Country tie

If the UK was country in which you were present at midnight for the greatest number of days in the tax year.

If you've got unusual cases or need more clarity you can find more detail to all of these here.

Split Years

There’s also the possibility of being able to split a UK tax year and thus further reduce your tax paid because it’s pretty unlikely that your contract will line up with the tax year.

Why is this a good thing? Because normally your residency status is set for a year. So if you arrive in December to teach in China you’ll still be a resident until the beginning of April (and the next tax year), which means you’ll still have to pay UK tax.

But split years recognise this and allow you to change your residence status (and with it how much tax you have to pay), as soon as you meet certain conditions.

There are three cases which allow you to split a tax year and become a non-resident from the moment you leave, PWC has a nice pdf on it here.

The most common reason for people going to teach abroad will be:

Starting full time work abroad. (See above for the definition). If you start working abroad full time, then you can count as non-resident from the point that you begin. (As long as you qualify for full time work for the whole period, you can’t just do it for a couple days.)

Here's a really standard tax disclaimer: We're not tax lawyers, this isn't official tax advice. You're responsible for what you do, if you're unsure of anything you'll need to talk to a proper tax lawyer and all that good stuff. I'm sure you knew all this anyway.

Image Attribution:

"Income Tax" by Alan Cleaver is licensed under CC BY 2.0.