Okay, so the UK might not have the best weather. But one good thing about it is its universities! In fact, the UK is a pretty trendy destination for foreign students to study in.
The UK’s higher education system is internationally renowned for its high standard. Unfortunately, it's also famous for being a pricey place for foreign students to study in.
Alas, for these students, there are no handy UK government student loans. This means foreign students have expensive accommodation and university fees to think about. But on top of all this, do foreign students have to pay tax too?
How Does Tax Work In The UK?
In the UK, every resident needs to pay income tax. Once you’re earning over the threshold of £12,570, like it or not, you’ll need to pay up.
But what if you’re a foreign student?
This question all boils down to whether or not foreign students are regarded as a ‘resident’ in the UK. After all, only UK residents are liable to pay tax.
If you come to the UK to work, once you have lived there long enough to be considered a resident (5 years), you’ll need to pay tax just like everyone else.
But, if you’ve come to the UK to be a student, then listen up! Because things are gonna work a little differently.
Do Foreign Students Pay Tax In The UK?
If you come to the UK to work and become a resident, you’ll need to pay tax. This may sound like a drag, but rules are rules.
But students don’t come to the UK to work, they come to study. To afford this, they may be funded by foreign income to finance university. Luckily, this leads us to some good news:
Foreign students usually don’t need to pay UK tax on foreign income. Hurrah! Just as long as this is spent on things like food, rent, bills, and study materials, UK tax won’t be charged.
What Are Double-Taxation Agreements?
So, if a student receives foreign income, as long as it is spent on their studies, UK tax won’t be charged. But what if a foreign student gets a job in the UK to finance their studies?
Well, this leads us to something called a ‘double-taxation agreement’.
These agreements are made between the UK and other countries. Some double-taxation agreements state that you don’t need to pay UK tax on your income as a foreign student.
Unfortunately, this won’t always be the case and some foreign students may need to pay tax on their wages.
So, make sure to check the tax agreements between your country and the UK!
When Do Foreign Students Need To Pay Tax In The UK?
If this all still feels a little confusing, don’t sweat it. We know tax can be a tricky subject.
That’s why we’ve compiled a nice and simple list for you to refer to. This will ensure you don’t get confused over UK tax for foreign students!
To break it down, you only need to pay tax as a foreign student if you…
- Are from a country with a double-taxation agreement that doesn’t cover foreign students’ income whilst working in the UK
- Plan to stay in the UK as your permanent home
- Bring foreign income to the UK and spend it on things other than living costs and course fees
Tax is never a fun subject to discuss. Especially if you’re a foreign student enjoying the adventure of studying abroad, tax is probably the last thing on your mind!
Whilst studying in the UK, you may want to spend your time trying a roast dinner, enjoying cups of tea, and indulging in the infamous drinking culture. But don’t get distracted from the boring, more mundane tasks. And yes, this includes sorting your tax.
Being a foreign student will not exempt you from nasty consequences if you don’t pay the right taxes. So, don’t let this spoil your time as a student in the UK!
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