How would you like to be able to work while sipping lemonade on the beach in Spain? Of course you would. For many Britons this is close to the ultimate escape fantasy (surpassed only by the one where you’ve won the lottery and don’t have to work at all any more). But if you’re already working from home, you’re half-way there, so why not go all the way?
A great deal of work is now being transacted entirely over the internet, and, in many cases, it really doesn’t matter where the person doing the work lives. When you call up a computer support helpline, you’re as likely to end up talking to someone in Mumbai as Aberdeen. Wi-fi hotspots are now quite common around the world. Laptops can be powerful machines. The truth is that, for many occupations the geographical constraints are falling away and it is primarily habit and the inertia of tradition that keep things trundling along in the same old ways.
Tax for Those Working AbroadSo, if you decide to move abroad, what do you need to think about? First, is it going to be a permanent move or a temporary one? Perhaps you have a holiday home in another country and would like to work from there for a few months each year. Or have you had your fill of old Blighty and want to say a permanent cheerio? The tax considerations are different in each case.
Tax will probably prove to be the most burdensome aspect of your plan to move abroad. Laws and regulations vary significantly from one country to another so it is strongly recommended that you get in touch with a local accountant in the country you are moving to. If you have contacts in the expat community there, they may be able to recommend someone who speaks English and is knowledgeable about the rules pertaining to foreign workers.
Britain has double taxation agreements with almost all other countries so you should never need to be taxed twice on the same income. Whether you primarily pay UK tax or tax in the country you are moving to is determined by your residency status. You are judged to be a British resident for tax purposes if you are in the UK for more than 183 days in each year. In addition, if you are in the UK for less than 183 but more than 90 days each year successively over a span of four years, you will be deemed a British resident for tax purposes too. If you still have revenue-earning assets in Britain, such as shares or property you rent out, though, you will still have to pay UK tax on those.
Practical Considerations for Those Working AbroadIt’s worth considering whether your clients or customers are going to be comfortable with the fact that you’re no longer based in the UK. Often they won’t give a hoot but, in certain professions, it may be subtly off-putting. If you decide that living abroad might have a damaging impact on the amount of business you get, you can always arrange to conceal it. For example, there are firms which offer a telephone answering service quite cheaply. They are happy to pick up the phone, respond as if they were employees of your company, and pass on the relevant details to you later.
It’s the revolution in communications technology which, for many, has made the dream of working abroad feasible. But don’t assume that the information superhighway has rolled through every remote region of every country on earth. In many places, telephone and internet connections may still be creaky and unreliable. Even when reliable services are available, it may take weeks or even months to get them installed. This could cause massive disruption to your business unless you have arranged that everything is ready in advance to enable a smooth transition.
Transitioning to Work Abroad: Tips
- Fill out a P85 form when you leave. This helps the Revenue determine your residency status.
- Don’t forget healthcare. Apply for a European Health Insurance Card (EHIC) to get free or low-cost treatment throughout Europe. Elsewhere you may need to take out private insurance.
- If you’re exchanging large currency amounts, find a specialist foreign exchange service. They charge lower fees than banks.
- If you’re entitled to a pension, you can ask the Pension service whether it can be paid into a foreign bank account or not. If you move elsewhere within the EU, your pension should be up-rated each year in line with inflation.