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f you are a UK doctor or medical professional thinking about moving abroad for work, there are a few UK tax issues worth looking at before you accept the job and book the flight.

Better salary, sunshine international experience and perhaps a tax regime that makes your UK payslip look slightly depressing?

You wouldn't be the first doctor to consider it.

We are seeing more doctors, dentists, consultants, pharmacists and other healthcare professionals considering overseas opportunities, whether for a few years, a longer term career move or potentially a permanent relocation.

And yes, there does seem to be one particular sunny destination appearing rather frequently in these conversations.

We won't name names.

But if you've recently found yourself looking at apartments with pools while simultaneously checking how long your NHS notice period is, this article may be for you.

The important point is that taking a job overseas does not automatically mean you stop paying UK tax.

Your UK tax position will depend on when you leave, how many days you spend back in the UK, what connections you retain here and what UK income, property, pensions and companies you leave behind.

Are you actually non UK resident?

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This is the starting point.

UK tax residence is determined under the Statutory Residence Test.

It isn't simply a case of saying:

"I work abroad now, therefore I'm non resident."

The number of days you spend in the UK matters, but so can whether you continue to have a home available here, whether your spouse or children remain in the UK, how much you work here and your previous UK residence history.

This is particularly relevant for medical professionals.

You might accept a full time overseas position but still return regularly to see family, retain your UK home or undertake occasional locum or private work when you are back.

All of these things can affect your residence position.

Tax residence should therefore be planned rather than assumed.

What happens to your overseas salary?

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Suppose you are a UK doctor who accepts a full time hospital position overseas.

If you genuinely become non UK resident, your overseas employment earnings will generally fall outside UK income tax, subject to the detailed residence and employment rules.

That can obviously be attractive where your new country has significantly lower personal tax rates.

However, the tax year in which you leave needs particular attention.

You may qualify for split year treatment. Broadly, this can divide the tax year into a UK part and an overseas part where the statutory conditions are satisfied.

For example, Dr A earns £130,000 as a UK consultant. She leaves the UK in September and starts her new overseas employment in October.

We cannot simply look at where Dr A happens to be living at the end of the tax year and assume everything after she leaves is outside UK tax.

We need to establish whether she qualifies for split year treatment and how her earnings fall between the UK and overseas parts of the year.

The date you leave can therefore be more important than you might expect.

Can I still come back and work some shifts?

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Possibly, but this is where doctors need to be careful.

Medical professionals often retain strong professional connections with the UK.

You might undertake occasional NHS locum shifts, continue private clinics, carry out work for a UK organisation, attend meetings or training here or remain a director of a UK company.

Working in the UK can affect both the taxation of that income and your residence position.

So if the plan is:

"I'll live abroad but come back every few weeks and do a couple of shifts."

Please don't rely on tax advice from another doctor who moved there six months ago.

Their circumstances could be completely different from yours.

What if you keep your UK home?

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This is very common.

A doctor accepts a three year overseas contract but doesn't necessarily want to sell the family home.

You may decide to rent it out instead.

Becoming non UK resident does not make UK rental income tax free.

UK property income generally remains within UK income tax even where the landlord lives overseas. The Non Resident Landlord Scheme may also need to be considered.

Suppose Dr B moves overseas but keeps her Leicester home and rents it out for £2,000 per month.

That £24,000 annual rent doesn't become overseas income simply because Dr B now lives somewhere considerably sunnier.

It remains UK property income.

The relevant property expenses and tax rules then need to be applied when calculating the taxable profit.

What happens if you eventually sell your UK home?

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Non residence doesn't automatically remove UK capital gains tax either.

Non residents can remain within UK capital gains tax on disposals of UK land and property.

If the property was previously your main residence, Private Residence Relief may reduce the taxable gain depending on the circumstances and periods of qualifying occupation.

This means someone keeping their former UK home while working overseas should consider the future disposal position before leaving, rather than waiting until they eventually decide to sell.

Records of purchase costs, improvements, occupation and periods of letting can become important several years later.

What if you have a private medical company?

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Many consultants, doctors, dentists and other healthcare professionals have a UK limited company through which they have historically undertaken private work.

That company may have accumulated substantial cash reserves.

Suppose Dr C owns 100% of Medical Consultancy Ltd and the company has £400,000 of accumulated post tax reserves.

Dr C accepts a long term overseas role and becomes genuinely non UK resident.

Can Dr C simply take the £400,000 as a dividend once living abroad?

Potentially, the UK treatment can be considerably more favourable than taking the same dividend while UK resident.

An ordinary dividend from a UK company can generally be paid to a non UK resident shareholder without UK dividend withholding tax.

However, you also need to consider the temporary non residence rules.

What if I move abroad, take the company money and then come back?

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HMRC has encountered this idea before.

Suppose Dr C moves overseas, becomes genuinely non UK resident, takes the £400,000 accumulated reserves from the medical company as a dividend and then returns to the UK after a relatively short period.

The company is likely to be a close company and Dr C is likely to be a material participator.

This means the temporary non residence rules need to be considered.

Certain distributions received while temporarily non resident can potentially be brought back into the UK tax charge in the period in which the individual returns.

So moving abroad, taking a large dividend and then moving home again does not necessarily mean tax free extraction.

The duration and circumstances of the period abroad matter.

This is why planning should happen before substantial company reserves are distributed.

What if you stay abroad longer term?

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This can produce a very different result.

If you genuinely become non UK resident, remain overseas sufficiently long to fall outside the temporary non residence provisions and receive qualifying ordinary UK company dividends while non resident, the UK tax position can potentially be considerably more favourable.

That doesn't mean every doctor with company reserves should immediately book a one way flight.

The tax rules of the new country of residence also need to be considered.

A dividend that isn't taxed by the UK may still be taxable in the country where you now live.

No UK tax and no tax are not necessarily the same thing.

What if you sell your medical practice or company while abroad?

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Suppose that instead of taking dividends, you eventually sell your shares in the business.

For an ordinary UK trading company, a genuinely non UK resident individual is not generally within UK capital gains tax simply because the company is incorporated in the UK.

This can potentially be relevant for someone expecting to dispose of a business after moving overseas.

But once again, temporary non residence needs to be considered.

If you leave the UK, sell your company while abroad and return after a sufficiently short absence, certain gains realised during the period of non residence may potentially be brought back into the UK tax charge when you return.

The nature of the business matters too.

A genuine medical trading business is very different from a company whose value predominantly derives from UK property.

Don't forget your NHS pension

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For many doctors this could be one of their largest assets.

Moving overseas doesn't mean you should forget about your NHS pension until retirement.

Before leaving, it is worth getting an up to date picture of your accrued NHS pension benefits, which section or scheme your benefits sit within, your normal pension age and the effect of stopping NHS pensionable employment.

You should also consider whether there are any annual allowance issues arising before departure and how the pension may eventually be taxed if you remain overseas in retirement.

The eventual tax treatment can depend on UK legislation, your country of residence and the relevant double tax treaty.

Generic statements such as "UK pensions aren't taxed once you move abroad" should therefore be treated with caution.

What happens if you eventually come home?

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This is something worth considering before you leave.

Temporary non residence can affect certain income and gains realised while you are overseas.

Once you become UK resident again, dividends subsequently received will normally fall back within the ordinary UK dividend rules.

The fact that you previously lived overseas doesn't give you an ongoing exemption once you return.

Someone planning a two or three year overseas contract may therefore have a very different tax planning position from someone genuinely relocating overseas for the longer term.

Your expected return date can influence decisions involving company dividends, business disposals, investments, property and pensions.

A simple example

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Consider two doctors who both own UK medical companies containing £300,000 of accumulated post tax reserves.

Both accept overseas jobs and become genuinely non UK resident.

Dr A expects to work abroad for two or three years before returning to the UK.

Dr B expects to relocate overseas for the longer term.

They may look identical when they leave the UK, but their tax planning could be very different.

For Dr A, taking a substantial distribution while abroad requires careful consideration of the temporary non residence provisions.

For Dr B, if the period of non residence ultimately falls outside those provisions, the UK treatment of dividends received while genuinely non resident may be significantly different.

That is why the conversation needs to happen before the money is taken out of the company.

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Frequently asked questions for doctors moving abroad

Do UK doctors pay UK tax when working abroad?

It depends on your UK residence position and where your employment duties are performed.

If you genuinely become non UK resident and work overseas, your overseas employment earnings may fall outside UK income tax.

The year you leave and whether split year treatment applies need to be considered carefully.

Can I come back to the UK and do NHS or locum shifts?

Yes, but UK workdays and UK earnings need to be considered.

Working in the UK can affect the taxation of your earnings and may also be relevant when determining your UK residence position.

What happens to my UK home if I move abroad?

You can retain your UK home, but having a home available in the UK can be relevant to your residence position.

If you rent the property out, the rental profits can remain subject to UK tax and the Non Resident Landlord Scheme may apply.

What happens to my NHS pension if I move abroad?

Your accrued NHS pension does not disappear when you leave the UK.

Before moving, it is sensible to review your accrued benefits, the relevant NHS Pension Scheme section, your annual allowance position and how the pension may eventually be taxed in your new country of residence.

Can I take dividends from my medical limited company after moving abroad?

Potentially.

Ordinary dividends from a UK company can generally be paid to a non UK resident shareholder without UK dividend withholding tax.

However, the temporary non residence rules can become particularly important if you take substantial dividends from your own company and later return to the UK.

What happens if I return to the UK after working abroad for a few years?

Your UK residence position will need to be reconsidered when you return.

The temporary non residence rules can also bring certain income and gains realised while you were overseas into the UK tax calculation, depending on your circumstances.

Planning to work overseas?

For doctors and other medical professionals, an overseas move can be financially significant.

A higher salary, a different lifestyle and potentially lower personal taxes can make the numbers extremely attractive.

But your UK property, company reserves and pension don't disappear simply because your LinkedIn location changes.

And if your proposed destination happens to have lots of sunshine, extremely impressive hospitals, no shortage of British expats and rather more supercars than your average NHS staff car park, we probably have a reasonable idea where you're considering.

No judgement from us.

Just speak to your accountant before you board the flight.

At Fairfax Tax & Accounts, we advise doctors, consultants, dentists, pharmacists and other healthcare professionals on UK tax planning, private companies, property and international moves.

If you are considering working overseas, we can review your UK position before departure, consider the tax consequences and identify any decisions that would ideally be made while you are still UK resident.

Because sometimes the most important financial question about moving abroad isn't where you're going.

It's what you're leaving behind.

Do you also own UK property or other companies?

Read our separate guide to moving abroad with UK property, investments and limited companies for a wider look at dividends, property disposals, capital gains tax and temporary non residence.

This article provides general information only and does not constitute tax, pension, investment or immigration advice. UK tax residence, split year treatment, temporary non residence, employment income, pensions, property and company distributions depend on individual circumstances. The tax rules of the destination country should also be considered.

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