UK employees working overseas in specialist sectors

There are special and sometimes complex tax rules for UK employees within certain specialist sectors whose job requires them to work overseas or at sea for long periods of the tax year. This guide tells you where you can get further help.

On this page:

Tax Residence Indicator

From 6 April 2013 the rules that determine if someone is resident in the UK for tax purposes have been put on a statutory basis. These rules are known as the Statutory Residence Test (SRT). For the majority of people whether or not they are resident for tax purposes is quite straightforward under the test and their position will not change. For those with complex circumstances the SRT will provide more certainty about their residence status.

To help you understand your tax residence status HM Revenue & Customs (HMRC) have launched an on-line tax residence indicator. This residence indicator will give you an indication of your tax residence status after answering a few straightforward questions such as how many days you spent in the UK, where you have a home and if you have family ties. This is a pilot version. A full version will be released in 2014.

Check your residence status

Find out more about the Statutory Residence Test and changes to Overseas Workday Relief by following the links below:

The RDR1 is a guide for residents and non-residents on the residence, domicile and remittance basis rules for tax years 2012 to 2013 onwards. It replaces the booklet HMRC6.

RDR1

The HMRC6 booklet should be used as a guide for residents or non-residents for information on rules affecting your tax liability in the UK up to the end of tax year 2012 to 2013 only.

HMRC6

UK government workers abroad

If you work overseas for an extended period for the UK government (often referred to as a 'Crown employee' or 'Crown servant') you will have to pay UK tax on your employment income as if you live in the UK (regardless of whether you become non-resident or not 'ordinarily resident' in the UK). At the same time you will retain your UK Personal Allowance, which means you won't pay Income Tax on the first part of your earnings.

These rules apply no matter where you work or how settled you are abroad.

A 'double taxation agreement' will usually ensure you are not taxed on your income from Crown employment in both the UK and the country where you are resident.

Crown employees include (among others):

  • members of the UK armed forces
  • civil servants working abroad
  • diplomats

Meaning of residence and 'ordinary residence'

Personal Allowance - general information

Double taxation agreements

Contact HMRC

National Insurance for Crown employees

There are also special rules regarding National Insurance for Crown employees. To find out more speak to National Insurance Contributions & Employer Office (NIC&EO) - International Caseworker on telephone: 0300 200 3506 (+44 191 203 7010 from outside the UK).

Top

Working for European Union (EU) institutions

If you go abroad to work for an EU institution, you are affected in two ways:

  • you remain 'ordinarily resident' in the UK while you are away (only for tax years up to and including 2012 to 2013), providing you were ordinarily resident in the UK immediately before you went abroad. This means that the UK is considered your normal home and you retain various benefits back in the UK, such as access to NHS healthcare
  • you remain resident in the UK so long as you visit the UK at least once every tax year. This means you will pay UK Income Tax on your income in the UK. But you will not have to pay UK tax on salaries, wages and pensions paid to you by the EU institution. Instead you will have to pay a 'Community tax', which is deducted at source by the EU body that makes the payment to you

If you are UK resident and need to know more about how you will be taxed as an EU official abroad, contact HMRC.

Ordinary residence - find out more

Contact HMRC

National Insurance for EU officials

There are also special rules regarding National Insurance for EU officials. To find out more speak to NIC&EO - International Caseworker on telephone: 0300 200 3506 (+44 191 203 7010 from outside the UK).

Top

If you work on a ship

If you work on board a ship, you may be entitled to Income Tax relief on your earnings - known as the 'Seafarers' Earnings Deduction'. You will have to meet certain criteria, for example:

  • your claim must be for a period of 365 days or more that begins and ends when you were outside the UK
  • you must make at least one journey during the tax year (6 April to 5 April) that begins or ends at a foreign port

For more information on the Seafarers' Earnings Deduction follow the link below.

Tax relief if you work on board a ship

National Insurance contributions if you work on a ship

There are also special rules about National Insurance for people who work on board a ship. For more information follow the link below.

National Insurance for mariners

Top

Gas and oil rig workers

If you work on an oil or gas rig, you may be entitled to tax relief on your earnings, but the tax rules are complicated. They vary according to whether:

  • the place you work is within UK waters
  • the company you work for is a UK company
  • you are a foreign or UK national
  • the country in which you work has a double taxation agreement with the UK

Whether you are a UK resident working as a gas or oil rig worker, or a foreign national working within the UK or for a UK company abroad, you can find out more about how you will be taxed as a gas or oil rig worker by contacting HMRC.

Contact HMRC

National Insurance for gas and oil workers

There are also special rules regarding National Insurance for gas and oil rig workers. To find out more speak to NIC&EO - International Caseworker on telephone: 0300 200 3506 (+44 191 203 7010 from outside the UK).

Top

Volunteer development workers

If you are sent to work abroad in a developing country by a registered UK charity, you may be able to choose to pay a reduced rate of National Insurance. This is known as 'VDW Class 2' - the volunteer development workers' rate. The rate for the 2014 to 2015 tax year is £5.55 per week.

To find out more speak to NIC&EO on telephone: 0300 200 3506 (+44 191 203 7010 from outside the UK).

Check National Insurance rates for current and previous tax years

Top