Just because you leave the UK, this does not mean that you ‘fall out’ of the UK tax system. It will all depend on whether you cease to be classed as UK tax ‘resident’ or not. You should note that here we are considering where you are resident for tax purposes – this may not be the same as for immigration purposes or where you consider you are resident under the ordinary, natural meaning of the word.
Broadly, if you are UK tax resident, HMRC will want to know about your worldwide income, for example, earnings from a job in France even if those earnings are paid abroad and kept in a foreign bank account. Compare this to being UK tax non-resident, where you are still taxable, but only on UK source income – that is, income that arises in the UK, for example, bank interest from a savings account in the UK.
There is a big difference in tax treatment for residents and non-residents, so it’s important to be clear about which category you fit into. You can read more about the differences in HM Revenue & Customs' (HMRC) RDR1 booklet on GOV.UK.
There is more information about how to decide your residence status in the section When is someone resident in the UK?. This includes information on the Statutory Residency Test (SRT) for tax. There is also a guide to the SRT on the GOV.UK website.
The tests under the SRT are objective and depend on your specific circumstances. If you are leaving the UK, things start off relatively straightforwardly under the SRT in that:
- if you spend fewer than 16 days in the UK in a tax year you are definitely non-resident
- if you spend 183 days or more in the UK in a tax year you are definitely resident.
If you come somewhere in the middle of 16 to 183 days (and don't have a UK 'home') then you may have to consider days spent in the UK together with your wider circumstances, particularly relating to where you have a home and, if you work, where you work. You may also need to consider things like whether you have UK-resident family (that is, a partner or child) or available accommodation in the UK. As a result, things can become much more complex.
Suffice to say, if you were born in the UK, have always lived in the UK and your parents and family home remain in the UK, you are likely to have ‘sufficient ties’ with the UK (this is a technical term under the SRT) to be considered tax resident here during a temporary absence, even if your days of physical presence in the UK are towards the lower end of the 16 – 183 day range.
Please note that there are other tests that can help determine your tax residence status, for example, full-time working abroad, but these are unlikely to be applicable to students.
Under the SRT, an individual is usually either UK resident or non-UK resident for a full tax year. While there are rules that allow you to ‘split’ the tax year when you are leaving the UK (into a resident part and a non-resident part) the opportunities to do so on leaving the UK are limited to where the individual or their partner are starting full-time work overseas, or where they are ceasing to have a home in the UK.
Our examples consider the SRT rules in a bit more detail and in the context of several typical 'students leaving the UK' scenarios.
If you were born outside the UK and/or the UK is not your permanent home country working out your UK residence status if you leave the UK for a temporary absence could be quite complex and you may need to take professional advice for your specific circumstances.