Can I Live Abroad and Work for a UK Company? What You Need to Know

Introduction

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As more people embrace the digital nomad lifestyle, a common question arises: Can I live abroad and still work for a UK company? The short answer is yes—but the tax situation can be more complex than you might expect. If you're a UK national planning to live and work abroad full-time, it's crucial to understand how your UK tax residency status, HMRC rules, and PAYE implications work together. In many cases, you may not be liable for UK income tax on your overseas workdays—if you structure things correctly.

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📌 UK Tax Residency: The Starting Point

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Whether you're taxed in the UK depends primarily on your residency status under the Statutory Residence Test (SRT).
You’ll generally become non-resident for UK tax purposes if:

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• You work full-time abroad, averaging at least 35 hours per week, and
• You spend fewer than 91 days in the UK per tax year, of which no more than 30 are workdays.


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This is known as the “full-time work abroad” route to non-residency under the SRT. If you meet these conditions, the UK loses its right to tax your non-UK income, including salary earned while physically working overseas—even if your employer is UK-based.

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🛫 Split Year Treatment: Leaving Mid-Tax Year

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If you leave the UK part-way through the tax year to take up full-time work abroad, you may qualify for split year treatment.

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This means the tax year is effectively split into two parts:


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• UK part – when you were UK resident and subject to UK tax on worldwide income.
• Overseas part – when you became non-resident and are taxed only on UK-source income.


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To qualify, you must meet specific criteria, including:


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• Starting full-time work abroad, or
• Giving up your UK home; and
• Being non-resident in the following tax year.


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This can significantly reduce your UK tax exposure for the year of departure.

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✈️ HMRC’s Taxing Rights: UK vs Overseas Workdays

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Once you're considered non-resident, HMRC generally only have the right to tax workdays physically exercised in the UK.


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For example, if you’re living in Spain and working remotely for a UK company, your income related to days physically worked in Spain is outside the scope of UK tax. However, if you return to the UK and work for a few days, HMRC will tax those specific days.


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Keeping accurate records of your travel and work locations is essential if you plan to apportion income between UK and non-UK workdays.

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💼 What If You’re Still on UK Payroll (PAYE)?

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Many UK employers will keep you on the PAYE system, deducting UK tax from your salary—even if you're no longer resident. This is often overcautious and may lead to you overpaying tax unnecessarily. There are two main ways to deal with this:



Submit Form P85 to HMRC

When you leave the UK, you can file Form P85 with HMRC to notify them of your departure and claim non-resident status. You can request an NT (No Tax) code, which tells your employer to stop deducting income tax via PAYE.

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Note: The NT code does not affect National Insurance contributions, which may still be due depending on your circumstances.

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File a UK Self Assessment Tax Return

If tax continues to be deducted through PAYE and you don’t have an NT code, you can reclaim any overpaid tax by filing a Self Assessment tax return after the end of the tax year. You’ll declare your residency status and claim relief for the overseas workdays.

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✅ What About Personal Allowance?

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The good news is that most British nationals—regardless of tax residency—remain eligible for the UK personal allowance, currently £12,570 (2025/26). This means the first portion of your UK-source income (like UK workdays) is tax-free.


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This allowance can help reduce or eliminate UK tax on any residual UK income.

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🧠 Final Thoughts

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Yes, you absolutely can live abroad and work for a UK company—but understanding your UK tax residency status and filing the right forms is crucial to avoiding unnecessary tax.


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By ensuring you become non-resident, qualify for split year treatment, and use the P85 or a tax return to recover PAYE tax, you can protect your income and maintain compliance with HMRC.


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If you're planning a move abroad or are already working remotely outside the UK, speaking to a specialist UK tax advisor can help you make sure everything is handled properly from day one.