If you’ve made the move across the world to the UK, firstly, congratulations! It’s always exciting getting started in a new country, and the last thing anyone wants is for tax admin to get in the way.
You may have a few questions about the country you’ve moved to, and the home you’ve left behind. When do you have to start paying taxes in the UK, say? When do you stop paying taxes in New Zealand? Or is it one of those situations where you have to pay tax to both governments?
All good questions! The short and unsatisfying answer: it depends on your situation. Let’s dive in.
- When do you start paying taxes in the UK?
- When do you stop paying taxes in NZ?
- Dual tax residency
- If you have a rental property
- What we do here at Hnry
When do you start paying taxes in the UK?
This one is pretty simple: if you’re a non-resident, you’ll need to pay tax on any income earned in the UK. There’s no time-limit test – you’ll owe taxes from the get-go (minus any personal or trading allowances, of course).
If you live and work in the UK for a certain period of time, you’ll generally be considered a UK-resident for tax purposes. At this point, you’ll generally be required to pay UK tax on any foreign income.
New Zealand and the United Kingdom have a double taxation agreement in place, meaning that any income you earn in one country will be taxed in that same country. In this case, if you move to the UK, any NZ income you still earn will be taxed in Aotearoa.
You’ll still need to report this income (as well as any other foreign income) in your UK tax return, though.
When do you stop paying taxes in NZ?
You’ll no longer be considered an NZ tax resident if:
- you’ve left the country for 325 days in any 365 day period, and
- you no longer have a “permanent place of abode” in Aotearoa.
💡 Once you’ve been out of the country for 325 days, you’ll be considered not an NZ tax resident from the first day you left. It’s essentially backdated (mind the pun).
So if this is you, easy! You can tidy up any outstanding tax requirements from the period before you left, and call it a day. From this point out, you’ll generally only owe taxes in the UK – unless you earn income in NZ, in which case you would pay NZ tax on that income under the double taxation agreement.
Dual tax residency
In some situations, you may end up being a tax resident of both Aotearoa and the UK. In this case, our double taxation agreement has a series of “tie-breaker” rules to determine which country gets to tax what income.
If both countries have a right to tax the same income (it’s possible!), you may be eligible for tax credits that will partially or fully offset the double taxation. But it depends on your circumstances, and what’s laid out in the double taxation agreement.
If you have a rental property in NZ
Here’s where it gets trickier – if you own or rent out a property in New Zealand while you live in the UK, you may still be considered a New Zealand tax resident. Rental homes tend to be considered a “place of abode” by the IRD, meaning you’ll likely stay a New Zealand tax resident even though you’ve left the country.
If this is the case, you’ll be a dual tax resident, subject to the rules laid out in the double taxation agreement.
What we do here at Hnry
If you’re a Hnry user from NZ who’s just moved to the UK, welcome! Our UK service is ready to take over your tax obligations, including paying your UK taxes and filing your tax returns with HMRC. It’s the exact same service you know and love, but now with English accents.
In the meantime, if you have any sole trader tax stuff outstanding from your time in New Zealand, the Hnry NZ team will be able to tie up loose ends, and file any last returns owing. You’ll then need to let them know that you’ve moved countries – they’ll help close your account so you can start fresh in your new home.
So once you’ve settled in, we can help you set up shop. Join Hnry in the UK, and never think about tax again (again!).
Share on: