As an Australian working in the UK, you are obliged to comply with the UK tax requirements. This is why you must obtain a National Insurance number upon your arrival, as this is a requirement for tax purposes. This is the equivalent of an Australian Tax File Number.
The tax rules in Australia are different from that in the UK, and something you must be aware of, preferably, before you leave Australian soil.
Tax tips for Australians working in the UK
- Tax treatment will depend on whether or not you are domiciled in the UK or Australia for tax purposes.
- UK taxation for employees is done through the PAYE system, where income tax and National Insurance contributions are automatically deducted from your salary by your employer.
- If you are a consultant or contractor, with payments made through an intermediary, you will have to comply with The UK tax legislation known as IR35. Compliance with IR35 is a complex area of tax legislation, and should be discussed with a tax expert.
Since Australia has a Double Taxation Agreement (DTA) with the UK, your income and some of your gains won’t be taxed twice, but only in one country. Where applicable, tax may be charged at a reduced rate.
Because of DTA, you may be able to claim full or partial relief from UK tax on certain income and gains made from UK sources.
As a non-resident tax payer, you will have to submit a self-assessment tax return. You can’t use HMRC’s free on-line system, only a commercial software.
You must complete form P85 when you leave the UK, except if you need to complete a tax return.