Freelancing and Travel - Do I Still Have To Pay Tax in the UK?

Yes, in most cases – if you’re still a UK tax resident, you’ll need to pay UK tax on all your income while freelancing abroad, including earnings from overseas clients.

Here’s how to work out your tax residence status, what it means for your tax bill, and how to avoid being taxed twice on the same income.

Understanding UK tax residency

A general rule of thumb is that if you spend 183 or more days in the UK in a given tax year, you are a UK tax resident – no questions asked.

But even if you spend less time here, you can still be caught by the Automatic UK Tests.

The Home Test: If you have a UK home available for 91 days or more in a row and you spend at least 30 days in it, you could be classed as a resident. This applies if it’s your only home, or if you have an overseas home but spend fewer than 30 days a year in it.
The Full-Time Work Test: If you work full-time in the UK over a 365-day period that overlaps with the tax year, this can also make you a resident. To trigger this, more than 75% of your ‘substantial’ work days (days where you work more than 3 hours) must be spent in the UK.

If none of these tests give a clear answer, HMRC uses the ‘Sufficient Ties’ test.

This looks at your connections to the UK – such as family living here, available accommodation, or work, and weighs them against the number of days you’ve spent in the country.

It works on a sliding scale – the more ties you have, the fewer days you can spend in the UK before you are classed as a resident.

Paying UK tax while freelancing abroad

If you find that you are in fact considered a UK tax resident, you most likely need to pay UK tax on all your income.

This rule applies even if some of your freelance income comes from clients based in other countries.

You’ll have to declare worldwide income through your Self Assessment.

Paying tax in another country

On the other hand, if you’re not considered a UK tax resident, then you’ll probably only need to pay UK tax on the portion of your income you earn in the UK.

You’ll still need to pay tax on your foreign income to the local tax authorities, though, so make sure you’ve done your homework and understand the tax rules for that country.

Conducting thorough research into the country you’re planning to move to is also just a generally good idea, as it will allow you to take advantage of any unique marketing points, and also connect with potential new clients.

If you’re feeling a little lost, an accountant can help simplify the different tax rules for you, and they can also help when it comes time to submit your returns.

Avoiding double taxation

If you pay tax in another country, you may be able to offset this against your UK tax return, so you don’t end up paying tax on the same money twice.

This is possible if the other country has a double-taxation agreement with the UK.

To make sure you have all the information you need (and pay the right tax to the right authority), it’s imperative that you keep detailed and accurate freelancing records.

Bookkeeping is the practice of recording all your transactions (coming in, going out, and moving from one part of your business to another) to help you stay on top of your finances and see where you’re earning.

It not only keeps you compliant but also gives you clarity and control over your freelance career.

Key things freelancers should consider before travelling

Keeping good records

Good bookkeeping software streamlines your record-keeping while you’re on the move, saving you valuable time (which you’ll no doubt need when travelling).

Online accounting is entirely remote based too, meaning you can access your records anywhere you have an internet connection – ideal for digital nomads who don’t want to stay in one place for too long.

Permission to work

It’s also worth looking into your destination’s visa and work permit rules before you go, since “remote work” doesn’t automatically mean you’re allowed to freelance there long-term. Some countries require a specific digital nomad visa, even if you’re only working for UK or other overseas clients.

Track your travel

Keep a record of your travel dates too. Since UK tax residency often comes down to day counts, knowing exactly when you entered and left the UK (and other countries) will make it much easier to work out your status if HMRC ever asks.

Communications

You’ll also want to make sure you maintain good communication with clients while on your travels, as some may feel more comfortable if they know your general whereabouts and current time zone.