Contracting in the UK from abroad| What you should know

Remay Villaester (May)
22.03.21
4 minute read

Love the idea of working from abroad? If you dream of jetting off somewhere with a warm and sunny climate, or are already an expat - read on.

In this guide, we’ll cover everything you need to know about contracting in the UK from abroad. Get the setup right and you can live abroad, while still accessing all the opportunities of the UK employment market.

We’ll give you the lowdown on work permits, business setup and more, for self-employed, freelancers and contractors.

And of course, you’ll need to figure out the most cost-effective way to get paid as an overseas contractor. Open a Wise multi-currency account and you can get paid quickly and securely by clients all over the world for free.

But more on that later. Let’s start with the basics.

Using an umbrella company for contracting in the UK from abroad - is it a good idea?

Tax and other arrangements can be complicated when you work overseas. Understanding the intricacies of the tax system in the country - which could even vary by district - can be extremely difficult. You may even end up paying too much tax, in both the UK and in your new temporary or permanent home.

This is why many overseas contractors choose to use an umbrella company specialising in international contracts. These are third party suppliers, which act as an ‘employer’ for contractors. They agree contracts with clients, provide payroll services, handle expenses and crucially, can help to handle tax affairs.

For contractors in the UK or abroad, using an umbrella company can be quicker, easier and cheaper than other methods such as using a limited company. We’ll look at that option in just a moment.

If you’ve worked in the UK as a contractor, you may have used Parasol Group, SG Umbrella or Sterling Umbrella Company - or another of the major UK-based umbrella companies. But if you’re planning on contracting in the UK from abroad, it’s recommended to use one that specialises in international contracts. Such a company can advise on the best tax arrangements and have all the relevant licences and compliant processes in place.

Can I use my UK limited company for working abroad?

Unfortunately, the UK leaving the EU has had an impact on how easy it is for UK residents to freely work abroad - especially in Europe. This includes using a limited company for working abroad¹.

If your limited company is already registered with the EU, you can continue using it to contract in the UK and worldwide. But if not, you’re likely to need a self-employed work permit in your country of choice. These permits can sometimes be difficult to get. For this reason, many overseas contractors choose to remain as sole traders or use umbrella companies.

Travel expenses and the HMRC 24 month rule

If you live overseas but take on contracts from the UK, you may find yourself needing to visit occasionally. For example, you might need to meet with clients or carry out some of your work here.

If this is the case, and you’re a UK resident for tax purposes, it may be possible to claim tax relief from HMRC on your travel expenses.

It’s important to note that something called the HMRC 24 month rule will apply². This dictates that you can only claim tax relief on travel and other expenses that are out of the ordinary - such as a one-off trip to your client’s office.

If you will need to regularly make the trip over a period lasting 24 months or more, or need to spend more than 40% of your time at the workplace, you won’t be able to claim tax relief.

Does IR35 still apply if I work abroad?

IR35 rules are designed to make sure that contractors, who would be classed as employees if they provided their services directly to the client, pay the same tax as permanent workers. These rules can still apply if you’re contracting in the UK from abroad, but it all depends on your tax and working status.

So, if you’re not a UK taxpayer and/or you work for an umbrella company, IR35 isn’t something you need to worry about³.

A cheaper way to get paid as an overseas contractor - Wise

As an international contractor, you’ll need to find the most convenient and low-cost way to get paid by your clients in the UK. Wherever you are in the world, Wise can help.

Open a multi-currency Wise account for business and you can receive money for free in GBP, EUR, AUD and many other currencies. It’s ideal for businesses of all shapes and sizes, including sole traders, freelancers, contractors and startups.

With Wise, you can invoice in the local currency and get paid quickly and securely. You don’t even need a UK bank account, as you’ll get local UK bank details for free when you open your Wise account.

Once you’ve received payment from a client, you can hold the money in your account to cover future expenses, withdraw it to your bank or spend in the local currency where you live using your Wise debit Mastercard. You’ll never pay any monthly or transaction fees, only a tiny fee to convert the currency using the real, mid-market exchange rate.


There are quite a few complicated things to get your head around when contracting in the UK from abroad, especially in the wake of Brexit. But things should be a little clearer now that you’ve read this guide, where we’ve touched on issues such as umbrella companies, work permits and IR35.

And of course, getting paid for your work wherever you are in the world with the borderless Wise business account.

Start saving today with Wise


Sources used for this article:

  1. SG accounting blog post
  2. gov.uk - employment income manual
  3. gov.uk - IR35

Sources checked on 22-March-2021.


This publication is provided for general information purposes only and is not intended to cover every aspect of the topics with which it deals. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content in this publication. The information in this publication does not constitute legal, tax or other professional advice from TransferWise Limited or its affiliates. Prior results do not guarantee a similar outcome. We make no representations, warranties or guarantees, whether express or implied, that the content in the publication is accurate, complete or up to date.

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