Paying Income Tax When You Work Outside the UK

This page is about income tax on earned income. The laws on social taxes (National Insurance in the UK) and other income are different and they have their own page.

In brief, the deal is this:

If you leave the UK to work in another European country for less than six months (strictly, that's 183 days) and directly after that you return to the UK, then you are allowed to pay income tax in the UK and not in the country in which you are working.

If the stay is more than six months, you must pay income tax in the country in which you are working and that tax is due from the start of your stay and not from after the sixth month.

Do not even dream about finding ways around the six months rule by taking a holiday or the like. It does not exempt you and the tax men of Europe have decades of experience in dealing with these games. The best way to earn a full tax audit must be to play games and irritate the tax man.

Remember too that your weekends back in the UK still count towards those 183 days.

If your period of working in another country is 183 days or more then you will be liable to pay income tax in that country. However, you may be liable to pay income tax in the UK as well!

When are you liable for income tax in the UK?

If at any time in a given tax year you are Resident or Ordinarily Resident in the UK then you are liable to pay UK income tax on any money that you earn anywhere in the world.

The only exception occurs if you leave the UK to take up full time work overseas under a contract of employment. In this case then, if your absence covers at least a full tax year and you meet the requirements of the 91 day rule you are deemed to be not Resident, not Ordinarily Resident and not liable to UK income tax on your overseas earnings from the day that you leave until the day that you return.

The Bad News

I have some bad news. As far as I know, there is no legal way to avoid paying tax on earned income that arises as a result of work done within Western European countries. Of course, if you move from one country to another every six months and transact all of your financial affairs through an offshore company they it may well be possible to get away without paying taxes but, it's not legal!

Related Links
Tax Residence Are you tax resident?
91 day rule The acid test!
Main page My main UK tax page
Home My home page
Countries Guides to different countries