UK Personal Tax Allowance If You Live Abroad
Published / Last Updated on 09/01/2024
Many people, both British expats and foreign nationals have financial interests in the UK such as pensions, investments and property.
In the UK we have a Personal Tax Allowance Threshold (currently at £12,570.00 pa). This is what a UK resident can receive in income before any income tax is due.
What if you are a British National or Foreign National that now lives overseas? Are you entitled to a UK personal tax allowance if you live abroad?
You are still entitled to the personal allowance and tax-free UK income each year if any of the following apply to you:
- You are a British citizen i.e., you hold a British passport.
- You are a citizen (passport holder) of a European Economic Area (EEA) country (means the European Union in addition to Iceland, Liechtenstein and Norway that are not in the EU but are in the EEA).
- Note for EEA countries, if your only sources of income from within the UK are dividends, interest and royalties (or a combination of these) then you are not entitled to a UK personal tax allowance as these income streams are paid without deduction of tax at source in the UK anyway, so you may pay tax in your resident country depending upon the tax laws there.
- You have worked for the UK government/ the British Crown at any time during that tax year.
- You are resident in the Isle of Man or the Channel Islands.
- You have previously lived in the United Kingdom and are now resident abroad for the sake of your health, or the health of a member of your family who is resident with you.
- You are employed in the service of any territory under His Majesty's protection.
- You are employed in the service of a missionary society.
- You are a widow, widower or surviving civil partner whose late husband, wife or civil partner was employed in the service of the British Crown.
- Commonwealth citizens are no longer automatically entitled to a UK personal tax allowance from tax year 2010/2011.
- Many Commonwealth countries continue to have rights (but not all) or have double taxation treaties with the UK that include that their citizens may be entitled to a UK personal tax allowance provided they are still resident in that country, the so called ‘N & R rule’ meaning a National and a Resident of the Commonwealth country.
- Nationals and residents of many non-EEA, Commonwealth, and non-Commonwealth countries e.g., Albania, Algeria, Bahrain, the Cayman Islands, the USA and many more are not entitled to a UK personal tax allowance.
- You can check this in your country’s double-taxation agreement with the UK or use HMRC’s Digest of Double Taxation Treaties.
- Surprisingly, Nationals and residents of many non-EEA and non-Commonwealth countries e.g., Argentina, China and many more are entitled to a UK personal tax allowance as Nationals, residents or both (N & R rules again).
- You can check this in your country’s double-taxation agreement with the UK or use HMRC’s Digest of Double Taxation Treaties.
See HMRC's full guidance.
Must Claim the Personal Tax Allowance Annually
- If you’re not a UK resident, you must claim entitlement to the UK Personal Allowance at the end of each tax year in which you have UK income using HMRC’s form R43.
