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working for a UK company while living abroad

working for a UK company while living abroad

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Could anyone advise if one can continue working under payroll for a UK company and exempt from income tax, while living abroad permanently.

I believe if one can confirm his status as non-resident for UK tax purpose (living abroad permanently and staying in UK for 90 days a less in a tax year), he should be exempted from UK income tax. My question is can he be still in the payroll due to his UK employment contract?

I'm not sure if there is any "zero tax" taxcode can be used in the payroll?

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By mark hodges
06th Aug 2012 17:16

well as an employer you can

Apply to HMRC for exemption from deducting PAYE and NI on the amount of non UK earnings.  This is an exemption rather than a right though.  See S690 ITEPA 2003. 

Earnings from a UK employment carried out in the UK are subject to tax though. So if the employee works in the UK for part of the year the exemption will be on that part that relates to non UK working.



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By frustratedwithhmrc
07th Aug 2012 04:32

Yes - We've had this exact circumstance previously

1. If the employee has previously worked in the UK:

Provided that you can prove non-residence (a Certificate of Tax Residence from the employees local fiscal authority would be ideal here, although it is not mandatory), then the employee can apply to the HMRC Centre for Non-Residents for an "NT" Tax code. If the employee has previously submitted a P85 on departure from the UK, this is also helpful and a copy should be sent with the request.

Once the Centre for Non-Residents are satisfied that the employee is non-resident, they should issue an "NT" tax code to both the employee and the employer which allows the payment of salary without deduction of income tax. Earnings from UK employment income conducted outside the UK would then only be subject to taxation in the country of residency of the employee.

From the perspective of National Insurance, this should not be deducted either although there are some special circumstances which should be confirmed.

2. If the employee has no previous ties to the UK, then the feedback from Euan McLennan to a similar, earlier query is appropriate:

Euan MacLennan wrote:

If a UK company pays a non-UK resident for work done outside the UK, the employee is not subject to UK income tax on the salary and PAYE is irrelevant.  There is no need to contact the Revenue to get a PAYE code of NT issued.  Although it is not strictly necessary, you might like to submit a form P46 for the non-resident worker, quoting his address overseas and with the PAYE code overwritten to say that you will be using NT.

At the end of the tax year, the UK company will need to disclose the salary paid to the non-UK resident on the employer's supplementary return, form P38A, as it will have to answer No to Question 1 on the P35 about enclosing forms P14 for everyone on the payroll.

Regardless of either of the above:

If the employee does any work in the UK (unless those duties are merely 'incidental') then these payments will be subject to taxation in the UK as per HMRC guidance contained in "HMRC6 - Residence, domicile and the remittance basis" section 10.4 Earned income – When you are not resident in the UK

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