Digital nomadism is no longer niche. If you are working remotely abroad for a UK company, your lifestyle may be flexible, but your UK tax position is not. Before you leave, you need to understand how HMRC will view your residence status, your salary, and any post-departure payments.
This guide focuses solely on UK personal tax matters for individuals working remotely outside the UK for a UK employer. It does not deal with overseas local tax, immigration, or employer corporate issues.
The key question is simple: if you leave the UK, when does HMRC stop taxing your employment income?
In practical terms, achieving a non-resident status is the turning point because it means UK tax exposure on employment income is limited to duties physically performed in the UK - more on this in the next paragraph.
If you leave the UK part-way through a tax year, non-resident treatment can begin from the date you exercise your first workday overseas through reliance on split year criteria Case 1: full-time work overseas.
To rely on this case, you must be in full-time work overseas and manage your day and workday count in the UK. Note that you can be considered in full time work overseas if you work for a UK employer as what matters is where you physically work, not where your employer is located or where you are paid.
A critical point is often missed is to qualify for split-year treatment under Case 1 is you must be non-resident in the following tax year through being in full time work overseas i.e. you need to satisfy criteria in the tax year of departure and the following tax year. Otherwise, the split-year claim will fail and you will remain UK resident for tax purposes in the tax year of departure.
For ongoing non-resident status, the practical approach is to satisfy the full-time work overseas criteria under the SRT which will be satisfied through working full time overseas and managing your day and workday count in the UK.
Where is your salary taxed if you are non-resident? For UK personal tax purposes, employment income is sourced to where the duties are physically exercised under s27 ITEPA 2003. In other words, HMRC looks at where you work, not simply where your employer is based or where your salary is paid.
If you are non-resident, HMRC's taxing rights are limited to your UK workdays. To apply this correctly, you must identify the number of days on which duties are carried out in the UK and compare that with the total employment days in the relevant period.
By way of example:
• If 10% of your workdays are carried out in the UK and 90% are carried out overseas, HMRC will only tax the 10% UK portion, providing that you are non-resident.
• If 0% of your workdays are carried out in the UK after departure, HMRC will have no taxing right over your salary, again providing that non-resident status is in place.
This is why record-keeping matters - you should retain travel records, work calendars, and supporting evidence showing where duties were performed.
What about bonus payments, share awards, or other deferred compensation? These items are not always taxed by reference to the payment date alone. Instead, they are commonly sourced to the period in which they were earned, vested, or accrued.
This means that leaving the UK does not automatically remove a later payment from UK tax. If the bonus or equity relates to a period when you were UK resident and performing duties in the UK, HMRC retain taxing rights over some or all that amount.
By way of example:
1. You are resident in the UK for the entire 2024 calendar year.
2. You leave the UK on 1 January 2025 and become non-resident.
3. You receive a bonus in April 2025 in respect of the 2024 calendar year.
In this case, the bonus will be wholly taxable in the UK as it was wholly earned during your UK resident period. The fact that payment happens after departure does not, by itself, change the source of the income.
The same principle applies to equity income. Example as follows:
1. You are resident in the UK for the entire 2024 calendar year.
2. You leave the UK on 1 January 2025 and become non-resident.
3. You do not work in the UK at all during the 2025 calendar year.
4. You exercise equity income in April 2026 that was earned during the period 1 January 2024 to 31 December 2025.
In this case, HMRC will tax 50% of the equity income – the portion that was earned during the period you were UK resident from 1 January 2024 to 31 December 2024. The remaining 50%, relating to the non-resident period from 1 January 2025 to 31 December 2025, will not be subject to UK tax as work duties were wholly performed overseas.
The key point is that payment timing is not decisive. Even though the equity is paid in April 2026, HMRC sources the income back to the period the award was earned.
What if you still have some UK income after departure? If you are a UK or EEA national, you continue to qualify for the UK personal allowance even while non-resident. If you are not a UK or EEA national, you may qualify for the personal allowance under a double taxation agreement, which you can view here.
What this means? Even if you are in receipt of UK sourced income i.e. UK workdays or trailing income such as equity or bonus, there may be no UK tax to pay as you can use the 0% tax band against the UK taxable income.
How do you stop UK tax being withheld from salary once you have left? You can submit a P85 form to HMRC. This tells HMRC that you have left the UK, become non-resident and wish to be paid gross of taxation.
Providing that HMRC accepts the facts, an NT (No Tax) code will be issued to your UK employer. If that happens, your salary can be paid without UK PAYE withholding on the basis that your ongoing employment duties are performed outside the UK and you are non-resident.
You can complete an P85 form online here.
What if you do not want to use the P85 form route? Some individuals prefer to remain, in practical terms, more "incognito" during the tax year and deal with matters later through Self-Assessment.
In that scenario, UK PAYE may continue to be deducted from salary in the first instance. You can then file a UK tax return to:
• claim non-resident status;
• apply split-year treatment where available;
• report the correct UK workday allocation; and
• reclaim any excess UK tax deducted through payroll.
This route can be appropriate if your facts are still developing, if you prefer not to change payroll immediately, or if you want the final position reconciled through the tax return process.
You can register for self-assessment online here.
If you are planning to work abroad for a UK company, the key steps are clear: establish your non-resident status under SRT, review how your salary and any bonus or equity are sourced and decide whether to use a P85 or reclaim tax through Self-Assessment. Providing that these steps are handled correctly, you can materially limit unnecessary UK tax exposure.
Global Tax Consulting advises internationally mobile individuals on residency reviews, UK tax planning, and tax return preparation. If you need support with non-resident status, split-year treatment, tax planning or a repayment claim, Global Tax Consulting can help you structure the position clearly and report it correctly to HMRC.
SRT Advice | Non-Resident Planning | UK Tax Return
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