A bonus is taxed by reference to the period it was earned for, not the date it lands in your account. Earn it here, receive it abroad, and the UK generally still has a claim.
Leaving a UK job in the spring and receiving the annual bonus in the summer, after you have moved, is one of the most common expat tax situations there is. The instinct — that a payment received while living abroad is a foreign payment — is wrong, and the reasoning is simple once stated: employment income is taxed by reference to the duties it rewards, and those duties were performed in the UK.
Ask What the Payment Is For
| Payment | What it rewards | Typical UK position |
|---|---|---|
| Annual bonus for a completed UK year | UK duties | UK taxable |
| Bonus for a year split between countries | Both | Apportioned |
| Payment in lieu of notice | Contractual, UK employment | Usually UK taxable |
| Retention bonus for future overseas service | Overseas duties | Often not UK taxable |
| Genuine termination payment | Loss of employment | Special rules apply |
The middle row is where most people actually sit, and it is the one that requires work. A bonus covering a performance year during which you moved is apportioned by reference to where the duties were performed over that year — the same principle as share awards, on simpler facts.
Termination payments follow their own regime with a partly exempt element and specific anti-avoidance rules for payments in lieu of notice. If your departure involved a settlement agreement rather than a straightforward resignation, that is a different analysis, and one worth taking advice on before signing.
What Payroll Will Actually Do
In practice, a UK payroll paying a former employee usually operates PAYE on the whole amount, often on an emergency basis because the employment has ended and a P45 has been issued. That produces a deduction that may be too high in two directions at once: too high because part of the bonus may be attributable to overseas duties, and potentially wrong because the emergency code ignores the allowances already used in the year.
The remedy is either a section 690 direction where the split is known in advance and the employer is willing, or a claim through Self Assessment after the year end. For most people it is the second, which makes this a cash-flow problem as much as a tax one.
The Split-Year Interaction
A bonus paid in the overseas part of a split year is still charged on the UK-duties basis, because split-year treatment removes foreign income from charge, not UK-source employment income. This is the point where people most often assume the split solves the problem, and it does not. Our guide to split-year treatment sets out what the treatment actually does.
Sequencing, Where You Have a Choice
- Find out the payment date before you fix your leaving date. Sometimes there is flexibility on one and not the other.
- Check whether the bonus is discretionary or contractual, because leaving before payment often forfeits a discretionary award entirely.
- Model both scenarios. A large bonus falling into a year with no other UK income can be taxed more lightly than one stacked on top of a full year's salary — the basic rate band runs to £50,270 before higher rates begin.
- Ask about the coding your employer will apply, so an emergency deduction is not a surprise.
- Expect to file a return for the year of departure to settle the position.
Your New Country Also Has a View
Many countries tax on a receipts basis, meaning they look at when the money arrived rather than what it was for. That is precisely the mismatch that produces double taxation on post-departure bonuses: the UK taxes it as UK-earned, the new country taxes it as locally received. The treaty resolves it, but only if you claim — see claiming credit in your new country. Do not assume the two authorities will sort it out between themselves.
Frequently Asked Questions
Is a bonus paid after I emigrate still taxable in the UK?
Usually yes, where it rewards duties performed in the UK. Employment income follows the work it relates to, not the date or country of payment.
What if the bonus covers a year in which I moved?
It is apportioned by reference to where the duties were performed across that performance year, so part is UK taxable and part is attributable to your overseas service.
Why did my former employer deduct emergency tax?
Because the employment ended and a P45 was issued, so the payroll has no current code to operate. The excess is recovered through your tax return rather than by the employer correcting it later.
Does split-year treatment stop the UK taxing it?
No. Split-year treatment removes foreign income and gains from the overseas part of the year. UK-source employment income stays in charge regardless.
Related Guides
Keep reading with these related guides and calculators:
- Share options when you leave — the same rule, larger numbers
- Section 690 directions — getting withholding right first time
- Split-year cases — what the split actually removes
- P45 explained — why the emergency code appears
- Bonus tax calculator — what a bonus costs before you move
Check your take home pay
See exactly what you'll earn after tax with our free calculator.
Calculate Your Take Home Pay →