From the ancient ruins of Machu Picchu to the growing tech scene in Lima, Peru has become an appealing destination for many British expats. Whether working remotely, running a business, or enjoying retirement, it’s crucial to understand how living in Peru affects your UK tax obligations.
Taxes don’t disappear just because you relocate — they follow your income. For Britons in Peru, navigating two distinct tax systems requires careful planning, awareness of international agreements, and good record-keeping to avoid paying twice on the same earnings.
1. Understanding UK Tax Residency
The foundation of all cross-border tax matters lies in tax residency. The UK determines residency using the Statutory Residence Test (SRT), which considers:
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The number of days spent in the UK each year;
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The presence of a home, family, or employment ties; and
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The frequency and duration of visits.
If you remain a UK resident, HMRC taxes your worldwide income — no matter where you live or earn it.
If you become non-resident, you are taxed only on UK-sourced income, such as rental profits, pensions, or investment returns.
For many long-term expats in Peru, achieving non-resident status for tax purposes can significantly reduce UK liabilities — but this must be determined carefully and reviewed each year.
2. Tax Residency Rules in Peru
Peru’s tax authority, SUNAT (Superintendencia Nacional de Aduanas y de Administración Tributaria), applies its own residency rules.
An individual is considered Peruvian tax resident if:
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They spend 183 days or more in the country within a 12-month period; or
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They establish permanent residence or employment ties there.
As a Peruvian tax resident, you are taxed on your worldwide income.
If you’re classified as a non-resident, you’re only taxed on income from Peruvian sources.
For expats, this often means you could owe taxes to both countries unless relief is available through a tax treaty.
3. Is There a UK–Peru Double Taxation Agreement?
Unlike some European countries, the UK and Peru currently do not have a comprehensive Double Taxation Agreement (DTA).
This means that income earned in both jurisdictions could, in theory, be subject to tax in each — though there are mechanisms for relief.
UK taxpayers may claim Foreign Tax Credit Relief for taxes paid in Peru, reducing their UK liability on the same income. Similarly, certain UK-sourced income may not need to be declared again in Peru depending on local classification and source rules.
However, without a formal DTA, avoiding double taxation requires careful documentation and often professional support to interpret both systems correctly.
4. UK Income That Remains Taxable While Living in Peru
Even after moving abroad, some types of UK income remain subject to UK taxation. These include:
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Rental income from UK properties;
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Pensions (especially government service pensions);
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Dividends or interest from UK companies or banks;
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Self-employed income linked to UK clients.
Each of these income streams must still be declared to HMRC, even if you live and work in Peru. Expats must often file a UK Self Assessment tax return by 31 January each year to report and pay tax on such earnings.
5. Filing Taxes in Both Countries
British expats living in Peru frequently have to submit two tax returns — one to HMRC in the UK and one to SUNAT in Peru.
In the UK:
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The tax year runs from 6 April to 5 April, and online returns are due by 31 January.
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Non-residents earning UK income (e.g., rent) must usually file via Self Assessment.
In Peru:
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The tax year follows the calendar year (January to December).
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Tax returns, known as Declaración Jurada Anual, are generally due by March–April of the following year.
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Digital filing through SUNAT’s online system is mandatory.
Because both tax years differ, expats must keep detailed records to align income periods and claim foreign tax credits accurately.
6. Common Mistakes UK Expats in Peru Make
Living in another country brings its share of bureaucratic surprises, especially with taxes. Common pitfalls include:
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Failing to declare UK property or pension income;
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Not updating HMRC about non-resident status;
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Ignoring local tax obligations in Peru due to assumptions about “expat exemptions”;
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Misunderstanding currency exchange reporting;
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Forgetting to claim Foreign Tax Credit Relief when filing with HMRC.
Such mistakes can lead to unnecessary tax payments or, worse, penalties from both authorities.
7. Managing UK Property While Living Abroad
Property ownership remains one of the most common UK income sources for Britons abroad.
If you rent out a UK home while living in Peru, you must register with HMRC’s Non-Resident Landlord Scheme (NRLS).
Under this programme:
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Letting agents or tenants withhold basic rate tax (currently 20%) from rent payments;
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You can apply to receive rent gross, provided you commit to filing an annual UK Self Assessment return.
Allowable deductions include maintenance, insurance, and certain mortgage interest expenses — reducing taxable profits.
Keeping accurate digital records ensures you remain compliant and prepared for cross-border reporting.
8. Digital Tools and Professional Support
Managing UK and Peruvian taxes from abroad can be daunting. Fortunately, digitalisation has made the process more efficient.
HMRC’s online portal allows British expats to file, pay, and communicate securely from overseas, while SUNAT’s digital systems support similar online interactions in Peru.
However, understanding how both systems overlap — especially in the absence of a Double Taxation Treaty — often requires expert help.
Specialist advisory firms like My Tax Accountant help expatriates handle UK Self Assessment filings, claim tax reliefs, and navigate complex cross-border obligations with confidence. Professional guidance can prevent costly double taxation and ensure you remain compliant under both jurisdictions.
9. Financial Planning for Life Between the UK and Peru
Beyond compliance, expats should plan strategically for long-term financial health.
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Pension planning: UK State Pensions can be received in Peru but are typically taxable there.
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Currency management: Fluctuating exchange rates between GBP and PEN can affect real income.
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Investments: Gains from UK investments may be taxable in both countries depending on source rules.
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Emergency funds: Inflation and exchange rate shifts in Peru make maintaining UK-based savings a prudent safety net.
Good planning minimises exposure to risk and ensures smooth transitions between tax years.
10. Final Thoughts
For British expats in Peru, tax management is about balance — understanding your obligations in both countries, keeping records, and seeking expert advice when needed.
Even though the UK and Peru lack a formal tax treaty, it’s entirely possible to avoid double taxation through careful planning and timely filing. By staying proactive and informed, expats can enjoy the best of both worlds: the adventure of life abroad and the reassurance of compliant, efficient tax affairs.
Living overseas should be about opportunity, not anxiety — and with a bit of diligence, your taxes can stay as orderly as your travel plans.
