Rotating Character With Local Velocity

I can't figure out how to make a rotating character where the velocity will be applied in the direction the character is facing - I can only seem to apply linear velocity in world space, i.e. not taking the rotation of the character into account.

I am trying to create something like the spaceship in Break the Line (a great little game!):

Any help appreciated! @Simon Crack you must know? Thanks!

 

Have you tried ticking Image direction in the properties?

 

Yes, I tried that to no avail.

 

very interesting gameplay