Earning Lots and Living Abroad? I Need Tax Help!

If you are an individual who comes in the category of the top earners and you are a UK resident as well, you must be struggling with the complicated tax implications. You are now going through a stage of earning lots and living abroad.

Whether you are settled overseas or somewhere else, you do not need to be worried anymore as we have got you covered here with the solutions. The solution to the tax complications is not harder than the process of moving abroad.

This guide will help you to find the answers to all your burning questions when you have settled abroad but have to fulfil the tax implications of the UK, too.

We will let you help to develop an understanding of earning lots and living abroad, how the case of personal allowance works for you, how will you manage if you are taxed twice, and how your rental property in the UK will be handled.

Earning Lots and Living Abroad – Do You Need Help?

When you have settled abroad, it’s more likely to be the case that you will have to pay the basic tax like income tax on any of the earnings that you are making through the UK mediums. Such a case will consider the following features normally:

• Your saving interest
• Pensions
• Salary or wages
• Airbnb earnings and other rental incomes.
• If you plan to sell your land or residential property that is the UK.
• In case of selling any other asset, you will not have to pay any kind of tax.

What Will be the Case with My Personal Allowance? – Will I Get Them?

The personal allowance is the amount of income you can earn before you start paying income tax. For the 2023-24 tax year, this amount is £12,570.

However, if you are earning from UK sources and your income exceeds certain thresholds, your allowance may be reduced:

• Income over £100,000: For every £2 you earn above this threshold, your allowance is reduced by £1.
• Income over £125,140: If your income exceeds £125,140, you will not receive a personal allowance.

Impact of Settling Abroad:

If you have settled abroad but earn income from UK sources, you will still be subject to UK tax on that income. However, if your total income exceeds the personal allowance threshold, you will have to pay tax on the amount that exceeds the personal allowance.

• If your income is £125,140 or more, you will lose your allowance entirely and be taxed on your entire income from UK sources.

What If I am Taxed Twice?

Sometimes the residents of the UK who are now settled abroad have to go through circumstances where they find themselves in a position to be taxed twice for the same amount of income.

How is that possible? Sometimes this happens due to the country you are now settled in does not have an agreement named double-taxation agreement (DTA) with the UK. This makes you pay the tax twice for the UK as well as the country you are living in.

By now you must be wondering what is a DTA and how it works for you. A DTA works like an agreement for two countries to agree upon certain tax rules with mutual understanding.

With the help of this agreement, you will be able to apply for tax relief in the UK to avoid being taxed twice by two countries. If you aim to check whether the country you are living in has it with the UK, you can simply go to the UK website and find it.

Is My Rental Property in the UK Taxed?

When you have settled abroad but you still have your rental property in the UK, you will have to pay income tax in the UK. There is a chance of paying the  CGT too in your case.

This is liable in the case when you earn some gains after you sold out your property in the UK.  The non-resident Landlord (NRL) scheme will help you to pay both of these taxes.

This scheme is set by the UK government for people who have settled abroad for more than a period of six months. This way the landlords will be able to get their tax deduction straight from the help of their tenants or agents.

The Bottom Line

Now that you have gathered a fair amount of information about earning lots and living abroad, we can bring the discussion towards wrapping up. There is no doubt that settling abroad is a complicated process, however, handling the tax implications of both countries is more complicated.

Sometimes you are stuck in such a situation that you will find yourself in a position where you are taxed twice by the country you are living in and the UK for the same amount of income.

You can take help from the multiple schemes that are mentioned earlier to get yourself out of such a scenario. Furthermore, you have the option of getting tax relief from the UK government but you should check the eligibility criteria before you plan to apply for the tax relief. This will help you to avoid paying twice for the same amount of earnings and focus on your savings more.

Disclaimer: The information about earning lots and living abroad provided in this blog includes text and graphics in general. This does not intend to disregard any of the professional advice.