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bigduckontax, Accountant
Category: Tax
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I am a UK citizen, currently working overseas. It is likely

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I am a UK citizen, currently working overseas. It is likely that I will be liable to pay UK tax on my salary, as I will be in the UK for more than 91 days in the current tax year. My employer does not have a pensions scheme. Can I pay a proportion of my salary into a UK pension scheme and reduce my tax liability?
Hello, I'm Keith and happy to help you with your question.

It is clear that you are aware of the rules. I assume you did take P85 action when you originally left the UK. If not you can do it any time and even on line.

The 91 day rule is actually an average over 4 years. Here is the HMRC guidance on the matter:


If you're in the UK for 183 days or more in a tax year, you're resident for that year for tax purposes.

If you come to live in the UK permanently or to remain for three years or more you're resident from the date of arrival.

You're also treated as resident if you're in the UK for an average of 91 days or more in a tax year - worked out over a maximum of four consecutive tax years.'

So there you have it: be in the UK under 183 days and over four years don't let the average 91 day rule be breached.

If you are liable to UK tax as a result of being classified as resident then you are entitled to your Personal Allowance of 10K and any contributions to a UK pension scheme are allowable against tax up to 100% of salary or 40K whichever is the lower. Also if you take a SIPP you can go back 3 years and used unused contributions up to the same percentages save that before this current tax year the upper limit was 50K.

I do hope I have helped you with your questions.
Customer: replied 3 years ago.



Thank you for your very helpful reply. Just a bit more detail: I am 58 years' old and already have a police pension. I will only be working and living abroad for 18 months (from January 2014). Can I just confirm that I can invest up to 40K UK pounds from my salary this year into a UK pension scheme and, if I do, I will not be liable to pay UK tax on that amount? Thanks in advance. Regards, ***** *****

Right Nick, remember the 100% of salary rule for pension contributions. Your police pension does not constitute salary although it is earned income and taxable in the UK irrespective of residence. Providing you have the salary to cover the 40K contribution then your surmise is correct.

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