Understanding and abiding by HMRC’s tax rules, especially if you're self-employed and a non-resident in the UK, can be tricky. But as your UK residence status determines how much tax you owe, it's crucial to get a grip on the basics. 

Put simply, while UK tax residents will generally pay UK tax on their worldwide income, while non-residents usually pay UK tax on their UK income. There are some important exceptions and special rules, including rules for qualifying new residents and double taxation agreements.

But what exactly are the rules, how do you work out your residence status, and how do you pay HMRC the tax you do owe? Let's break it all down in simple terms.

Understanding your UK residence status

Your UK residence status is determined by the Statutory Residence Test (SRT). The test looks at your circumstances during each tax year, which runs from 6 April to 5 April. The number of days you spend in the UK is important, but it isn't the only factor.

You'll need to consider:

• Whether you meet one of HMRC’s automatic overseas tests
• Whether you meet one of the automatic UK tests
• Your ties to the UK, such as family, accommodation and work, if you need to use the sufficient ties test

You’ll count as a UK resident for the tax year you’re checking if: 

• You spent 183 or more days in the UK in that tax year.
• The UK was your only home was for 91 days or more in a row - and you stayed in it for at least 30 days of the tax year.
• You have worked full-time in the UK for any period of 365 days, with at least one day of that period being in the tax year you’re assessing.

If none of these apply, and you meet one of the automatic overseas tests, you’ll generally be non-resident in the UK for tax purposes. You can use HMRC’s residence status checker to help work out whether you’re a UK resident. However, due to the complexity of the rules, we recommend speaking to a professional accountant or tax adviser for personalised advice.

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Answering FAQs on tax rules for non-residents in the UK

1. Do I need to pay UK tax if I live abroad?

Being a non-resident doesn’t automatically mean you don’t have to pay UK tax. If you’re a non-resident, you’ll generally pay UK tax on income that comes from the UK. This can include:

• Income from working in the UK.
• Rental income from UK property.
• UK pensions.
• Certain UK savings income.
• Other UK income that is taxable.

For example, if you live overseas but are self-employed and carry out work in the UK, you may still need to pay UK tax on that income. There are some exceptions. For example, non-residents do not usually pay UK tax on UK State Pension or interest from UK government gilts. You may also be able to claim relief under a double taxation agreement if the same income is taxed in another country.

If you’re employed by a UK business while living abroad, the tax position can also depend on where and when you carry out your work.

2. Can my residence status change from one tax year to the next?

Absolutely. You should check your UK residence status if your circumstances change, due to something like:

• Spending more or less time in the UK (even a few days more or less than the previous year could put you into a new threshold) 
• Buying or selling a home in the UK
• Starting a new job
• Getting married, divorced or having children
• Having your family move to or leave the UK

3. What happens if I move during the tax year?

Not only can your residence status change from one tax year to the next, but your residence status for tax-purposes can actually change part-way through the year as well. 

This is because the UK government gives ‘split-year treatment’ to people who relocate to the UK - or move back to their own country. This means the tax year is divided into two: a resident part and a non-resident part. Split-year treatment makes sure non-residents only pay UK tax on foreign income for the duration of their stay.

However, this rule only applies to people who live abroad for a full tax year or more before returning to the UK. There are other specific conditions that must be met, so if you are unsure, we recommend speaking to a professional accountant or tax adviser to find out whether the rule will apply to you. 

4. How do I pay tax as a non-resident in the UK?

Once you’ve confirmed your non-resident status for the tax year you’re checking, it’s time to pay the tax you owe. 

As a non-resident, you’ll only be paying tax on your UK income - and if you’re self-employed or a freelance worker, you’ll do this in much the same way as a UK resident would; by filling out a UK Self Assessment tax return and submitting it to HMRC by the annual deadline (31st January). Completing your Self Assessment (or Form SA100) is usually done online, though it’s still possible to file in the old fashioned way with a paper form.

Self Assessment is HMRC’s way of finding out how much Income Tax and National Insurance you need to pay. Unlike employees working under the PAYE system, self-employed workers handle their own tax deductions, including dividends, pensions and savings income. To do this, you must let HMRC know about all of your earnings and expenses, and HMRC will use this information to calculate your dues. They’ll then let you know how much Income Tax and National Insurance you need to pay. 

You can find out more here in our guide to filing your Self Assessment tax return online. If you’re planning to set up and run a UK limited company or sole trader business as a non-resident in the UK, read our guidance for following HMRC’s rules. 

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5. How can I get additional help in understanding tax rules for non-UK residents?

In a nutshell, understanding how taxes work for non-residents in the UK is vital for managing your money and staying compliant while working in the UK. Knowing your residence status, figuring out your tax situation and adapting to changes are all key parts of the process. But don’t worry if you’re still feeling a little confused about your residence status or HMRC’s rules - you’re definitely not alone!

If you need help understanding what tax you owe as a non-resident, or how to pay it, speaking with a professional accountant or tax expert is the right move. The experts can give you advice based on your specific situation, clearing up any confusion so that you can enjoy your time working in the UK as a non-resident to the max. 

Tax rules for non-residents at a glance

In a rush? We’ve put together a handy table with the answers for tax rules for non-residents in the UK.