In this article we’ll discuss some frequently asked questions regarding digital nomad taxes UK.
These questions can come up from two perspectives.
You can be a British digital nomad who spends a lot of time abroad but you want to know what tax liability you have in the UK and abroad.
Another possibility is that you are a digital nomad who’s originally not from the United Kingdom but who wants to spend some time there.
In both cases, there are some attention points from a tax perspective you want to be aware of.
How Does Tax Work as a British Digital Nomad?
If you are British digital nomad, taxes work the same for you as for anyone else. The reason for this is that your nationality hasn’t much to do with taxes. The important question here is: where is your tax residency?
You can keep having your tax residency in the UK and then you’ll keep paying income taxes there on your worldwide income.
There are different tests in order to check if you qualify as a UK tax resident or not. The most well-known criteria is the 183-day rule but there are many others. You can find more information about your tax residency status on the website of HMRC (the UK tax authority).
If you’re not considered a tax resident of the United Kingdom, you normally won’t pay any personal income taxes in the UK. Yet, there are some exemptions to this rule which we’ll discuss later on.
Nevertheless, if you spend a lot of time in another country or you start building connections with a country that could subject you to some tax liability there. So, you don’t only need to keep an eye open for the British tax rules but also for the tax rules of other countries you get involved with.
Do I Pay UK Tax as a Digital Nomad?
Tax obligations as a digital nomad can be complex. That’s why you’re probably looking for some answers in this article.
Whether or not you pay UK tax as a digital nomad depends on few elements. However, the starting point will always be your personal tax residence.
If you have your personal tax residency in the United Kingdom, you will have to pay personal income taxes in the UK on your worldwide income.
Nevertheless, also if you’re not a tax resident in the UK, you could still end up paying UK taxes.
One situation in which this could occur is if you take up an employment contract in the UK. In this case, you only pay taxes on that particular income from the UK as long as you don’t become a tax resident. Yet, based on double tax treaties you might even be able to escape UK tax liability as a whole.
However, a more common situation is whereby you’re not a personal tax resident of the UK but when you have a company there, a UK Limited for example. This company will pay UK corporate tax on its profits.
Moreover, also if you have incorporated your company abroad but you run it from within the UK, you could end up paying corporate taxes in the UK. This is all due to the international tax rules about permanent establishments.
What Are the Tax Implications of Leaving the UK as a Digital Nomad?
If you leave the UK, you need to check if you still meet the requirements of the statutory residence test to be qualified as a tax resident of the United Kingdom.
If you no longer qualify as a tax resident, you won’t have to pay taxes in the UK anymore, unless you still have income originating from the country.
You will also need to inform HMRC of your departure.
Can I Stop Paying UK Taxes If I’m a Digital Nomad Abroad?
Yes, you can stop paying UK taxes if you are a digital nomad abroad. However, the condition is that you should qualify as a non-resident of the UK for tax purposes.
As already mentioned before, the tax authorities in the United Kingdom apply some tests in order to determine whether they consider you a tax resident or not.
Yet, even if you qualify as a non-resident for tax purposes, you can still have to pay some taxes in the UK. This can be the case if you have income from UK source (e.g. salary or rent) or when your business is registered in the United Kingdom.
Do I Have to Pay Tax If I Work Remotely in the UK?
Whether or not you have to pay tax if you work remotely in the UK depends on your situation.
If you’re a UK taxpayer, you’ll have to pay UK income tax on this income irrespective of where you work from. Whether you work from the UK or from abroad, it doesn’t really matter.
There are some specific situations whereby double tax treaties could influence your tax liabilities but this is the general rule.
If you’re not a UK taxpayer and you just briefly visit to work remotely from the UK this shouldn’t immediately trigger tax liability in the UK.
Nevertheless, you do also need to take into account the tax rules of the country where you have your tax residency. Many countries will want you to declare your worldwide income, irrespective where you were exactly working when earning it.
How Long Can a Digital Nomad Stay in the UK Without Paying Taxes?
If you don’t have any connection with the UK and you spend less than 183 days there, you’ll shouldn’t qualify as a UK tax resident.
However, if you’ve been a taxpayer in the UK before or you have some other connections to the country, you might have to be more careful.
Furthermore, you do also want to make sure you have the right visa in place to stay in the UK and work there.
Can I Work as a Digital Nomad in the UK Without a Visa?
Whether or not you can work as a digital nomad in the UK without a visa will depend on your situation and citizenship.
If you’re a British citizen, you obviously don’t need a visa to visit your country of origin.
Also many other nationalities (e.g. Europeans) can visit the United Kingdom without the need to apply for a visa as you’ll get visa-free access for six months. You can check the online wizard from the UK authorities.
Even if you don’t need an actual visa, you might still have to get Electronic Travel Authorisation before taking off to the UK.
If you do need a visa you can apply for the Standard Visitor Visa which also grants you access for up to six months.
The UK authorities do accept that you work remotely from the UK if you fall under one of those schemes as long as it is secondary to your actual purpose for visiting (e.g. tourism). Of course, one could say that it’s rather subjective what the main purpose of your visit is if you can basically work from anywhere: working or leisure. It seems that the UK authorities take a flexible approach to this for now.
Furthermore, you’re not allowed to start working for a UK company. In this case you’ll need a local work permit.
Tax Tips for Digital Nomads
The starting point to assess you tax liabilities is your personal tax residency. So, you’ll always want to make sure you understand the rules of your country of tax residence.
Most of the time it won’t matter so much that you work from that country or from abroad, you might have to declare the income in any case. This is definitely the case for countries which apply worldwide taxation.
At the same time, there are also countries which have a territorial tax system. In this case, the source of your income will be important, more than where you are when doing the work.
Furthermore, you want to keep an eye out for the tax rules of any of the countries you are spending time in. Because if you’re not cautious, you could end up owing taxes there as well. This can potentially result in double taxation. Even if you can avoid double taxation, it will take a lot of time and effort to sort things out when different countries are in play and coming after you for taxes.
Which Countries Have Favorable Tax Treaties with the UK for Digital Nomads?
The United Kingdom has double tax treaties in place with over 100 countries. This is important for people with an international lifestyle like digital nomads or remote workers.
Now, whether or not a double tax treaty is favorable for you will fully depend on your situation. The provisions of a particular double tax treaty can be favorable for one person and unfavorable for another. This depends what you want to achieve.
Therefore, you can’t say that a certain double tax treaty is favorable or unfavorable. It just doesn’t work like that.
Anyhow, it is favorable that the UK does have so many tax treaties as this will help you solve some complex matters in international taxation and help you avoid paying taxes twice.
Work With Me
Taxes are a complicated matter, not only digital nomad taxes UK but international taxes for nomads in general.
Therefore, it’s important you make sure you understand which rules apply to you and how they can influence your tax liability in different countries.
If you want to assess your tax situation and are even looking for some optimizations, you can reach out to me. In that way you can finally stop worrying and start living life to the fullest.
