Taxes

Taxes in England for expats: Which should I pay?

The taxes in England for expats come with certain benefits you can take advantage of. Don’t miss this post!

If you live in England or are thinking of moving to this country, fish and chips will become your favourite dish, you’ll always have tea in the afternoon, and you’ll get used to the rainy days. But do you know what taxes foreigners must pay in England? In addition to adapting to their lifestyle, you’ll also need to learn about your tax obligations as an individual or a business.

This way, all your taxes will be up to date within the English tax system, helping you avoid being penalised for not knowing that all foreigners in England have taxes to declare. Your home country, reason for staying, earnings, and more will determine this. We invite you to explore each section in detail.

In this article

Types of Foreigners in England

This country is known for its multicultural environment where people from all over the world choose to live. One of the main reasons is that it is one of the most important financial hubs for establishing any business, and at an academic level, the country is home to some of the most prestigious universities. Whether you come to work, study, or invest, you need to understand the taxes you must pay as a foreigner in England. First, let’s distinguish the different types of foreign individuals who come to the country.

People

An individual is someone who has the legal capacity to work or buy goods, along with a series of tax obligations. This differs from a legal person, which is related to entities or businesses. Moreover, the individual must have a legal residence. In England, all foreigners must pay a series of taxes as individuals, and the rates vary depending on their personal situation. These are the main groups of people who settle in the country:

Qualified Professionals: These are workers looking for job opportunities, usually in big cities like London, Manchester, or Cambridge. The most in-demand sectors are healthcare, education, technology, and finance.
International Students: The universities of Oxford and Cambridge host thousands of students each year who wish to start their careers in one of the world’s most prestigious educational systems. This country is also a popular destination for learning the English language.
Expat Families: These families move to improve their quality of life, find job opportunities, and give their children a good education.
Retirees: Although not as many as in other southern European countries, some retired seniors choose to enjoy their retirement in England due to the country’s security and the services it offers.

Companies or properties

A business or legal person is an entity created under specific laws and has its own legal personality, as well as tax obligations. It differs from the individuals who form it, and as a foreign business in England, it is subject to taxes based on its commercial activity and profits, among others. Some examples of foreign businesses include:

Multinational Branches: These are branches and offices of large foreign companies that have established themselves in the country to expand their business. This is due to England’s connection to the European market and its economic influence.
Startups and Small Businesses: England supports new businesses interested in innovative projects that benefit the English system. For this reason, they have launched the Innovator Visa program, with great support for starting these businesses.
Real estate investments: Cities such as London, Oxford, and Bath have become popular destinations for foreign buyers, either for second homes or as rental market investments.
Agricultural or Rural Projects: Some foreigners choose to invest in rural areas like Yorkshire or the Cotswolds. These fertile lands are ideal for growing cereals, raising livestock, and producing dairy products. Recently, farms have become a highly sought-after option for tourist rental accommodation.

Different types of foreigners living in England @pexels.

Taxes for Foreign Individuals in England

All new foreign citizens are required to pay a series of taxes in England. The amount varies depending on the status of each individual, their residence, and their earnings or income sources. Staying up to date with these taxes ensures good contribution to the country’s financial system. Income Tax:

This tax applies to income earned in the country. If you’re a tax resident, you’ll also have to pay tax on all your global income earned abroad. The rates vary between 20% and 45%, but if your income doesn’t exceed £12,570 (€14,700 ($15,743)), you’re exempt from paying.
Social Security Contributions: Every foreigner can access healthcare services and receive a pension. Therefore, contributions to social security must be made through payments that vary between 12% and 14%, depending on the income.
Capital Gains Tax: This applies to the sale of properties, stocks, and other assets in the country. The rate is between 18%-24% for non-residential assets, 24% for residential properties, and 32% for ‘carried interest’.
Value Added Tax (VAT): The standard rate is 20% on goods or services consumed by any individual.

Tax Benefits for Foreigners in England

Thanks to a series of benefits and exemptions implemented by the government, foreigners in England can enjoy reduced taxes. This helps the country attract qualified professionals and high-income foreigners. The main benefits are as follows:

Non-Domiciled Status: Foreigners without permanent residence in England are only required to pay tax on income earned in the country. For example, a digital nomad who earns income abroad is exempt from declaring it in England.
Initial Tax Exemptions: Depending on residency status, some foreigners can benefit from tax exemptions during their first few years living in the country.
Specific Incentives: To attract foreign talent in technological and scientific sectors, the government offers many tax advantages for this group of people.
Exemptions for Foreign Pensions: Retirees who move to England can receive an exemption or a reduced payment on their pension due to double taxation treaties.

Important: If you are a frequent traveler and want to stay connected without worrying about expensive roaming or looking for a new SIM at every destination, Holafly’s subscription plans are for you. With a single eSIM, enjoy internet in more than 160 countries for a fixed price and no surprises on your bill. Travel without limits and connect easily and securely! 🚀🌍

Discover Holafly’s international unlimited eSIM & its benefits.

Buy Global eSIM

Taxes for Foreign Businesses or Properties in England

In addition to individuals, foreigners in England must pay taxes if they own businesses or acquire properties. These tax obligations depend on the profits made, the location of the business, or its activity. Here are the most common taxes:

Property Tax (Council Tax): This is a tax applied to all residential properties acquired in the country. The rate depends on its location and its taxable value. For example, a property in London may have an annual council tax between £1,500 and £3,000 (€1,740 – 3,480 ($1,800 – 3,700)).
Capital Gains Tax: This tax is applied to the sale of properties or assets in England. As always, it depends on the profit gained from this transaction, with rates ranging from 18% to 28% for non-resident foreigners.
Corporation Tax: 25% for companies with profits over £250,000 (€289,500 ($250,000)); 19% for profits under £50,000 (€57,900 ($50,000)); a marginal rate between £50,000 and £250,000 (€57,900 – 289,500 ($50,000 – 250,000)) (from April 2025).
Rental Income Tax: If you own a rental property and generate profit, you must pay this tax. The rate can go up to 45%, depending on your income.

Tax Benefits for Foreign Businesses in England

In the previous section, we covered the taxes foreigners must pay in England as individuals or businesses. However, the government has also created benefits to help ease the tax burden, especially during the early years. This way, the government attracts more businesses to the country and creates new job opportunities for its citizens.

Research and Development (R&D) Tax Relief: Foreign companies involved in science or technology can receive up to a 33% discount on their tax payments.
Advantages for Startups and Tech Companies: To support new startups, the government has created the Enterprise Investment Scheme (EIS), where investors can enjoy substantial benefits.
Special Economic Zones: Some areas in England, called Freeports, offer tax reductions on property tax or corporation tax for businesses located there. These zones are located in seaports or airports, such as East Midlands Airport Freeport and London Gateway Freeport.
International tax treaties: England has signed several double taxation agreements with foreign governments to prevent double taxation of income earned both in England and in your home country.

Different types of foreign businesses in England @pexels.

Taxes for Foreign Investments in the English Stock Market

Another type of tax for foreigners in England is related to investments in the English stock market. If you invest in the stock market, you may generate profits that must be taxed under the country’s tax system. These are your obligations as an investor in the English stock market:

Tax	Feature	Fees
Capital Gains Tax	This tax applies to profits made from assets sold.	18%–24% for non-residential assets; 24% for residential properties; 32% for ‘carried interest’.
Stamp Duty Reserve Tax (SDRT)	This tax applies to the purchase of shares in UK companies.	Rate of 0.5%
Dividend Tax	This tax applies to income generated from dividends.	Between 8.75% and 39.35%, with a new tax-free allowance of £500 (€580 ($500)).

Taxes for investing in the English stock market.

Frequently Asked Questions about Taxes for Foreigners in England

Do foreigners have to pay taxes in England if they are not residents?

Yes, all non-resident foreigners must pay taxes on their income earned in the country, from the sale of properties, or from rental income. However, they are not required to declare income earned in other countries; this only applies to residents.

What is the Non-Domiciled Status and how does it benefit foreigners in England?

The Non-Domiciled Status (Non-Dom) is a benefit that allows some foreigners not to pay taxes on their income generated outside the UK. This status is advantageous for people with high income or international wealth.

What taxes do foreigners owning property in England have to pay?

If you’re a foreigner and want to buy a home in England, you’ll have to pay a series of taxes. The Stamp Duty Land Tax is paid when purchasing the property, Council Tax is an annual tax for homeowners, and Capital Gains Tax applies when selling the property if there is a profit.

Are there treaties to avoid double taxation between England and other countries?

Yes, England has signed such treaties with many foreign governments. This helps alleviate the tax burden by preventing double taxation on income earned in both England and your home country.

What happens if a foreigner doesn’t pay taxes in England?

It’s crucial to understand your obligations with the English tax system. Otherwise, you may be subject to fines, interest charges on the accumulated debt, and even legal proceedings.

Where can I find information about taxes foreigners must pay in England?

You can find information online through the official government website in the HMRC section, where you’ll find all the details you need about taxes. You can also visit English consulates or embassies in your home country. Lastly, you may consult a tax advisor to help speed up the process.