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Tax and NI If You Come to Live in the UK

This section explains the basic rules for tax if you come to live in the United Kingdom. Find out how to pay tax on sources of income, make tax returns, and pay National Insurance.

TAX ON INCOME: Living in the United Kingdom means you may need to pay tax on your earnings. The types of income you pay tax on include:

There are different rates of Income Tax used in the United Kingdom. Even so, you only pay your tax rate on earnings and gains that go above your Personal Allowance.

Note: You do not need to pay UK taxes if the purpose of short visits is for business (e.g. meetings or training courses).

How to Pay Tax in the United Kingdom

Those who get employed will have Income Tax deducted direct from wages by their employer. But, you will need to send in a Self Assessment tax return if you are working for yourself or you have other UK income.

There are some other reasons why you might have to send in a tax return. They include situations where you:

  • Made a gain (profit) when disposing of (selling) certain assets (e.g. a second home or shares).
  • Need to pay UK tax on foreign income sources. It can include property rentals, bank account savings abroad, or an overseas pension. Taxation liabilities will depend on your residence status in the United Kingdom.

Note: There may be liabilities for tax if you return to the United Kingdom after living abroad if you once lived in the UK before.

Paying National Insurance in the United Kingdom

As a rule, you will need to pay National Insurance contributions if you work in the United Kingdom. The method of payment will depend on whether you are self-employed or employed by an employer.

Note: Your employer must check if someone can work in the United Kingdom ‘legally’. So, you will need to prove that you can work in the country.

There is a set process to apply for a National Insurance number. You would need the number to work or to claim welfare benefits in the United Kingdom. You also need an NI number to get the UK State Pension.

When National Insurance is not Required

You would not need to pay National Insurance contributions or get a number if either of these apply:

  • You have a Portable Document A1, E101 or E102 proving you pay National Insurance in another European Economic Area (EEA) country.
  • You have a certificate from a country with a bilateral agreement on social security with the United Kingdom.

Note: You should be able to get the document or certificate from the social security authority in your country.

A list of countries that have a bilateral agreement with the United Kingdom includes:

Barbados, Bermuda, Bosnia and Herzegovina, Canada, Isle of Man, Israel, Jamaica, Japan, Jersey, Guernsey, Republic of Korea, Macedonia, Mauritius, Montenegro, Philippines, Serbia, Turkey, USA.

You would not need to pay National Insurance for the first 52 weeks if ‘both of these‘ apply to your situation:

  • An employer in your home country sends you to work ‘temporarily’ in the United Kingdom.
  • You arrived from a non-EEA and non-bilateral agreement country.

Taxed in the United Kingdom and Abroad

You could get taxed twice on the same income or gains. This may happen if your country does not have a double-taxation agreement with the United Kingdom.

If You Paid Too Much UK Taxation

Read ‘Income Tax: leaving the UK – getting your tax right (P85)‘ for tax relief and refunds. It applies to those working for only a short time in the UK. Use the form ‘Income Tax: expat tax claim (R38 (Expat))’ when applying to claim back tax. It is for a foreign national assigned to the United Kingdom who thinks they paid too much tax.

National Insurance and Tax If You Come to Live in the United Kingdom