Have you been working in the UK while living elsewhere? For example, are you an IT professional from India who’s been sent on assignment to support a UK-based project? If so, you may be subject to UK tax obligations and might even be entitled to claim tax relief or a refund. This can often occur when an individual has not utilized their full annual tax allowance or has incurred allowable expenses related to accommodation and subsistence.
This article begins a series explaining what overseas professionals on secondment to the UK need to know about paying tax and claiming relief. From understanding tax residency status to claiming deductions for living costs, this guide is designed to help you navigate your financial obligations and entitlements effectively while working in the UK.
Understanding What a Professional Secondment Involves
A secondment typically involves being temporarily assigned to a different office or country by your employer. These assignments are common across various sectors, especially IT, consulting, engineering, finance, and project management. When seconded to the UK, you may be required to work there for several months up to two years.
Professionally, secondments can offer new perspectives, skill development opportunities, and exposure to international business environments. They can also help in forming valuable cross-border relationships and give employees a deeper understanding of their organization’s global operations.
On a personal level, living and working in another country like the UK can enrich your life experience, give you the opportunity to explore a new culture, and even improve your communication skills, especially in English.
Determining UK Tax Residency Status
One of the most critical aspects to consider when working temporarily in the UK is your tax residency status. This determines how your income will be taxed. The UK uses the Statutory Residence Test to assess whether you are a UK resident for tax purposes. It considers the following factors:
- The number of days you spend in the UK during the tax year
- Your connections to the UK, such as having family or a place to live
- Whether you have been a UK resident in any of the previous three years
If you’re classed as a UK resident for tax purposes, you will be taxed on your worldwide income. If you are considered non-resident, only your UK-sourced income is taxable. Therefore, it is important to accurately assess your status before the end of the UK tax year, which runs from 6 April to 5 April.
Understanding UK Income Tax Rates
UK tax residents are subject to income tax on all taxable earnings including salary, bonuses, benefits, and even certain types of investment income. Income tax in the UK is applied using tiered bands, which means that different portions of your income are taxed at different rates.
The tax bands for the 2024/25 tax year are as follows:
- Personal Allowance: up to £12,570 – 0% tax
- Basic Rate: £12,571 to £50,270 – 20%
- Higher Rate: £50,271 to £125,140 – 40%
- Additional Rate: over £125,140 – 45%
The Personal Allowance is reduced once your income exceeds £100,000 and is entirely eliminated when it reaches £125,140. This is important to keep in mind if your income falls within or near these limits.
If you work in the UK for less than a year and don’t use your full Personal Allowance, you might be eligible for a tax refund. It’s also important to monitor your total earnings to determine your applicable tax band and ensure proper deductions are made.
Declaring Other Income
If, during your professional secondment in the UK, you earn income beyond your primary employment—such as from freelance work, consultancy, side businesses, or investments—this income is likely to be taxable and must be reported through the Self Assessment system. This obligation applies regardless of whether your primary salary is taxed through the PAYE system, as PAYE only covers employment income processed by your employer.
Additional income includes self-employment earnings, income from online platforms, dividends, interest, royalties, rental income, and even earnings from overseas sources if you’re considered a UK resident for tax purposes during your secondment. If any of these apply, you must register for Self Assessment with HMRC, report all income accurately, and pay any additional tax due.
You should also maintain detailed records of all business expenses, receipts, invoices, and bank transactions related to this extra income, as you may be able to claim deductions that reduce your tax liability. Proper record-keeping is crucial in case HMRC requests verification or opens an enquiry.
Penalties for failing to declare all income or missing deadlines can be significant, including interest on unpaid tax, late filing fines, and even compliance investigations. The deadline for submitting online Self Assessment returns is 31 January following the end of the tax year (5 April), and any outstanding tax must be paid by the same date.
National Insurance Contributions (NICs)
In addition to income tax, most UK workers must pay National Insurance Contributions if they earn more than a set threshold. These payments help fund social security benefits including healthcare, unemployment support, and the UK State Pension.
As of the 2024/25 tax year, employees must pay:
- 10% on weekly earnings between £242 and £967
- 2% on earnings above £967 per week
For international workers on secondment, there are specific conditions under which you may be exempt from paying NICs:
- You continue to pay social security contributions in an EU or EEA country
- Your home country has a bilateral agreement with the UK on social security
To benefit from these exemptions, you must provide documentation, such as a certificate of coverage or similar proof from your home country’s authority. If such documentation isn’t available, and your secondment lasts less than 52 weeks, you may still avoid NICs under certain conditions.
Preventing Double Taxation
One of the biggest concerns for professionals on secondment is the possibility of being taxed twice on the same income. Fortunately, many countries have double taxation agreements with the UK to prevent this from happening. These agreements allow for tax relief in cases where income might otherwise be taxed in both countries.
The provisions of each agreement vary, but generally, they allow you to offset the tax paid in one country against your liability in the other. It’s essential to understand the terms of the agreement between your home country and the UK and make use of any available credits or reliefs.
You may need to provide proof of taxes paid abroad, complete special forms, and declare foreign income correctly. The UK government’s official website offers comprehensive guidance on how to claim tax relief under double taxation arrangements.
Importance of Keeping Records
Record-keeping is crucial for ensuring compliance and making accurate claims for reliefs or exemptions. You should retain copies of the following documents:
- Employment contract and secondment agreement
- Payslips and tax deduction certificates
- Accommodation and utility bills
- Travel receipts
- Correspondence with HMRC or your tax authority at home
Having complete records ensures that you can support your claims if HMRC requests further information. It also makes filing your Self Assessment return much easier.
Anticipating Future Tax Relief Opportunities
Planning ahead can help ensure you take advantage of all available reliefs. For instance, if you incur costs related to your temporary workplace in the UK, such as travel and accommodation, you may be eligible for certain reliefs. This is especially relevant if your secondment lasts less than 24 months.
Temporary Workplace Relief allows you to deduct:
- Daily travel between your UK accommodation and work location
- Reasonable accommodation costs, including rent, council tax, and utilities
- Subsistence costs like meals and non-alcoholic beverages
Temporary Workplace (Detached Duty) Relief
If your secondment to the UK is temporary and expected to last no more than 24 months, you may be eligible for Temporary Workplace Relief. This relief allows you to claim deductions on certain travel and subsistence costs incurred during your stay. It is particularly useful for individuals who relocate to the UK temporarily and incur expenses while living away from their permanent residence.
Eligible Expenses
Temporary Workplace Relief permits deductions for the following costs:
- Travel between your UK accommodation and place of work
- Reasonable accommodation costs, including rent, council tax, gas, electricity, and water bills
- Daily subsistence expenses such as meals and non-alcoholic beverages
You must keep detailed receipts and documentation to support any claims. Expenses must be reasonable and incurred wholly and exclusively for work purposes.
Ineligible Claims and Limitations
You cannot claim Temporary Workplace Relief if your secondment exceeds 24 months or becomes permanent. Furthermore, if at any point you become aware that your assignment will exceed 24 months, your eligibility ends immediately from that point onward.
The deadline to submit a claim for this relief is four years from the end of the tax year in which the costs were incurred.
Returning Home Mid-Year: What You Need to Know
If you leave the UK before the tax year ends (which runs from 6 April to 5 April), you may inadvertently pay more tax than necessary because the UK’s income tax system assumes full-year residency unless advised otherwise. Employers typically apply tax codes and deductions based on an annual projection of earnings, even if you only spend part of the year in the country. This often results in your tax being calculated as though you will continue to earn at the same rate for the entire year, which can lead to significant overpayment.
To address this, it’s important to complete a Self Assessment tax return after your departure. This allows you to clearly declare the exact duration of your residency, your total UK earnings, and any income earned before or after your time in the UK. If you are eligible, HMRC may offer split-year treatment, meaning you are only taxed on your UK income for the time you were actually present and working in the country.
When filing, be sure to include details such as your final date of work, the day you left the UK, and any travel or residency documentation that supports your claim. Submitting a P85 form alongside your tax return can also assist HMRC in processing your refund more efficiently.
Claiming Relief on Non-UK Income
If you earn income outside the UK while being a UK tax resident during your secondment, you may still be eligible for relief under double taxation agreements. Whether or not the foreign income was taxed in your home country, relief may be granted.
There are two main types of relief:
- Tax credit relief: Where you claim a credit for tax paid in another country against your UK tax bill
- Exemption relief: Where certain types of income are fully exempt under a tax treaty
To claim this relief, you must accurately complete the foreign income section of your Self Assessment return and provide necessary documentation. HMRC may require additional information before processing your claim.
How to File a Self Assessment Tax Return
Filing a Self Assessment return is essential for seconded professionals who have:
- Additional income outside of employment
- Overpaid tax due to partial-year residency
- Eligible claims under double taxation treaties or Temporary Workplace Relief
The process involves:
- Registering with HMRC if this is your first time filing
- Receiving your Unique Taxpayer Reference (UTR)
- Completing the return online using HMRC’s portal
- Reporting all sources of income, expenses, and tax reliefs
- Submitting the return by 31 January after the tax year ends
Late submissions can result in penalties, so it is vital to plan and gather all necessary documents in advance.
Understanding the Impact of Benefits and Allowances
If your UK employer provides non-cash perks such as a company car, housing allowance, private healthcare, relocation packages, or even gym memberships, these are classified as “benefits in kind” and are generally subject to Income Tax. Although they are not paid to you as salary, they still carry a monetary value and must be reported to HMRC because they contribute to your overall compensation.
These taxable benefits are usually declared by your employer through a P11D form at the end of the tax year. The form outlines each benefit’s cash equivalent, which HMRC then includes when calculating your total taxable income. Some employers may handle the tax on these benefits through “payrolling,” where the tax is deducted through your regular payslip instead of being reconciled later. In either case, it’s essential that you receive a copy of the P11D and cross-check it against what you actually received or used.
Overlooking these items can lead to inaccurate tax returns, which might result in underpayment penalties or delays in tax refunds. If you notice a discrepancy—such as a benefit being reported that you didn’t receive, or values that seem incorrect—contact your employer’s payroll or HR department as soon as possible to request a correction. Keeping clear records and supporting documents will also help you validate your claims when completing your Self Assessment.
Managing Your Exit: Planning Before Leaving the UK
If your secondment ends before the UK tax year concludes, it is essential to prepare a final summary of your income, benefits, and any reliefs claimed. This helps in:
- Confirming whether you have overpaid income tax
- Ensuring that your final payslip and P45 reflect all deductions
- Submitting any final Self Assessment return accurately
You should notify HMRC of your planned departure using the P85 form. This form helps HMRC determine if you are due a refund. Attach your P45 and any other supporting documents. Filing early can accelerate the refund process and help you avoid further correspondence after you’ve left the UK.
Pension Contributions and Tax Relief
During your secondment, if you or your employer have contributed to a pension scheme, consider how this impacts your tax obligations. Contributions to UK-approved schemes typically attract tax relief at your marginal rate, provided the scheme is registered in the UK.
If you are contributing to a foreign pension scheme while on secondment, different rules apply. The UK has agreements with several countries that recognize contributions made to certain overseas schemes. You may be eligible for relief from UK tax on such contributions if:
- The scheme qualifies under a double taxation agreement
- Your home country has recognized the scheme as tax-advantaged
- The employer’s contributions are in line with a secondment agreement
Keep records of all contributions and scheme details, and seek advice if you’re unsure of the reporting requirements.
Dealing with Capital Gains
Most seconded professionals won’t deal with capital gains while in the UK unless they sell investments, properties, or assets. However, if you do dispose of an asset while classed as a UK tax resident, you may be liable for Capital Gains Tax.
Capital gains are calculated based on the profit made from selling an asset. For the 2024/25 tax year, the annual exemption is £3,000. Any gains above this amount are taxed at:
- 10% for basic rate taxpayers
- 20% for higher and additional rate taxpayers
Disposals of UK property may have separate rules and may require reporting within 60 days. It is important to declare any such gains on your Self Assessment return.
Handling Part-Time Self-Employment and Side Income
Some professionals on secondment engage in side projects or freelance work. Any income generated during the secondment period must be declared and is subject to UK income tax if earned while you are considered resident.
You may claim allowable expenses against this income, such as software subscriptions, business travel, or home office expenses. Maintain separate records and invoices for all freelance activities to ensure accurate reporting.
Freelancers must register for Self Assessment and may also need to register for VAT if their taxable turnover exceeds the UK VAT threshold.
Understanding Split-Year Treatment
The UK offers a special provision called split-year treatment for individuals who arrive or leave the UK mid-year. Under this treatment, only the income earned during your UK residency period is taxed.
You may be eligible for split-year treatment if:
- You start full-time work in the UK
- You leave the UK permanently
- Your home ceases to be available in the UK
Claiming this treatment requires completing the residency pages of your Self Assessment return. It helps avoid taxation on non-UK income that was earned outside of your UK residency period.
Finalizing Records and Document Storage
Before leaving the UK, gather and store all important tax-related documents, including:
- Employment contracts
- Payslips and P60/P45 forms
- Utility and accommodation receipts
- Benefit-in-kind reports
- Pension statements
- Copies of tax returns
These records may be required later for filing, refunds, or compliance purposes in your home country. Secure digital copies and retain them for at least five years.
What to Expect After Departure
Once you’ve submitted your final return and any applicable forms like the P85, HMRC may:
- Issue a tax calculation (known as a P800 or SA302)
- Process your refund, if eligible
- Close your tax record if you’ve ceased all UK income
Be sure to update HMRC with a forwarding address and preferred contact method. If you continue to have UK income, such as rental income or dividends, you may still be required to file UK tax returns as a non-resident.
In the remainder of this part, we will cover how to manage cross-border financial planning, maintain tax compliance in both jurisdictions, and tips on consulting tax professionals to ensure accuracy.
Navigating Cross-Border Taxation After Your Secondment Ends
Even after your departure from the UK, you may still be liable for UK taxes if you maintain certain financial ties. These include owning UK property, receiving income from dividends issued by UK-based companies, earning interest from UK bank accounts, or running a UK-based business. The UK tax system distinguishes between residents and non-residents, and once your residency status changes, so does your tax treatment.
As a non-resident, you are generally only taxed on UK-source income. For example, rental income from a property in London remains taxable in the UK, even if you’ve returned to your home country. In such cases, you may need to register for the Non-Resident Landlord Scheme, which ensures the correct tax is withheld and reported. Similarly, dividends and interest may also be taxable depending on your circumstances and whether a double taxation agreement is in place between the UK and your country of residence.
You may no longer qualify for certain allowances, such as the Personal Allowance, unless you’re a citizen of a country with a reciprocal tax agreement. Filing annual Self Assessment returns remains important if you have any UK income. Failing to do so could result in penalties or enforcement actions by HMRC. Staying informed and seeking advice where necessary ensures compliance and protects your financial interests.
Ongoing Obligations for Non-Residents
Once you leave the UK and no longer qualify as a tax resident, you may still need to submit annual Self Assessment tax returns if you:
- Earn UK rental income
- Receive dividends from UK companies
- Operate a UK-based business
- Have investment income taxed at source in the UK
Make sure to update HMRC with your new address and residency status. If you continue receiving UK income, you might be taxed under different rules compared to when you were a resident. Some reliefs and allowances may no longer apply.
Planning Ahead with International Tax Advisors
Engaging a qualified international tax advisor is often helpful, especially if you:
- Have dual income streams across countries
- Plan to return to the UK in the future
- Are eligible for foreign tax credits or exclusions
A tax advisor can help with:
- Avoiding double taxation
- Claiming foreign tax credits in your home country
- Properly allocating income based on residency periods
- Ensuring all paperwork and declarations are accurate and complete
Professional advice ensures that your tax filings are not only compliant but also optimized to reduce liabilities and take advantage of available treaties.
Understanding Tax Treatment in Your Home Country
The tax rules of your home country will also play a critical role once you return. You may need to:
- Report UK income in your local tax return
- Convert UK earnings into local currency
- Offset UK taxes paid with available tax credits
Ensure that you maintain copies of all UK tax returns, forms, receipts, and correspondence. These may be needed for reporting to your home country’s tax authority. Some countries have stricter disclosure requirements on foreign income, and proper documentation is key.
Reporting UK Pension Rights and Benefits
If you contributed to a UK pension scheme, this could have long-term implications. Depending on your home country’s agreement with the UK, pension contributions made during your secondment may be either taxable or tax-deferred.
Upon retirement, pension withdrawals might be taxed in either the UK, your home country, or both, depending on the treaty in place. It’s important to understand:
- Whether your home country will recognize the UK scheme
- If withdrawals will be tax-exempt under treaty terms
- How to plan for future pension accessibility from abroad
Handling Inheritance and Estate Considerations
If you’ve accumulated UK assets such as savings, property, or investments during your secondment, consider their long-term implications. You may need to account for UK inheritance tax rules, especially if your estate value exceeds certain thresholds.
It’s essential to:
- Understand whether you remain domiciled in the UK for inheritance tax purposes
- Determine how your home country treats foreign-held assets
- Consider setting up cross-border wills or trusts to protect your estate
Proper estate planning can help reduce tax liabilities and ensure your beneficiaries receive assets in the most efficient manner.
Tips for a Smooth Tax Transition
Here are several practical steps to take before and after your secondment ends:
- Notify HMRC of your departure through a P85 form
- Submit your final Self Assessment return
- Consult your employer’s payroll department to confirm your tax status
- Retain digital and physical copies of all financial documents
- Open a digital folder or cloud storage for tax paperwork
- Stay informed about any tax rule changes in the UK or your home country
Taking a proactive approach can help avoid delays in tax refunds, future compliance issues, and unnecessary liabilities.
Reviewing Your Financial Position Post-Secondment
Once you’ve returned home, assess the full financial impact of your secondment. Consider:
- Total UK earnings and taxes paid
- Refunds or reliefs claimed
- Any savings or investments made while abroad
- Status of UK-based bank accounts or ISAs
- Future obligations for UK income, such as property
Reviewing this information helps you plan your financial future and integrate any UK considerations into your broader wealth management strategy.
Cross-Border Tax Essentials
We’ve reviewed the ongoing tax considerations that apply even after your UK secondment ends. Whether it’s managing residual income, understanding non-resident tax treatment, or working with advisors to optimize global tax planning, taking a thorough and organized approach ensures long-term compliance and financial health.
Professionals on secondment should understand both the short-term and long-term consequences of working abroad. By taking control of your tax position, keeping accurate records, and seeking expert advice where needed, you can protect your income, minimize liability, and take full advantage of available tax reliefs and refunds.
Conclusion
Undertaking a professional secondment in the UK brings with it not only career growth and international experience but also specific tax responsibilities and opportunities for relief that must be understood and managed with care. Whether your secondment lasts a few months or two years, being proactive about your tax affairs can prevent costly mistakes and ensure you maximise all entitlements.
From determining your residency status under UK tax laws to understanding which reliefs apply, such as the Personal Allowance, Temporary Workplace Relief, and double taxation treaties, it is essential to take a well-informed and structured approach. Accurate record-keeping, awareness of your obligations under Self Assessment, and timely submissions can protect you from penalties and unlock potential tax refunds.
As your secondment comes to an end, planning your financial exit from the UK is just as important as your initial tax setup. Filing a final return, submitting Form P85 if applicable, and ensuring clarity on your pension contributions and future UK income will help maintain compliance after your departure. For many, ongoing non-resident obligations like declaring rental income or investment gains require continuous attention even once they’ve returned to their home country.
In today’s increasingly global work environment, secondments are more common than ever. By educating yourself on the UK tax system and using professional advice when needed, you not only stay on the right side of compliance but can also ensure that the financial aspect of your international assignment is as successful as the professional one. With the right planning and understanding, you can turn a potentially complex tax situation into a manageable and even beneficial part of your international career journey.