In this article, we’ll delve into how to claim tax back when leaving UK.
You may question what happens to your UK tax in case you decide to leave the UK for some good reason, may it be leaving for work, school, or just simply trying life outside your comfort zone. Worry not! You could be eligible for a UK tax refund.
As always, your circumstances and tax status determine the outcome. Therefore, you must notify HMRC, the UK tax authority, of your exact foreign move. This ensures accurate calculations.
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This article isn’t formal tax, legal or financial advice, and is only written here for informational purposes.
The facts might have also changed since we wrote this article.
Claiming Tax Back from UK After Leaving 101
What makes you eligible to claim the refund of taxes?
If you’re a former UK resident, you may seek tax relief if you decide to relocate overseas. This situation may result in your UK tax residency being revoked. Thus, you must file and pay taxes in your native nation. Those who worked or resided in the UK and are liable for UK taxes but are leaving or plan to return may also file claims.
You may also claim if you work for the following and reside overseas:
- the British Crown, any other realm defended by His Majesty, or a missionary organization
- As the widow, widower, or surviving civil partner of someone who worked overseas for the British Crown, you are also eligible to file for a tax refund.
- If you were a resident of the UK but are currently living abroad due to your health or the health of a family member who lives with you, you could also be eligible to make a claim.
What details should you provide?
In the event that you depart the UK during the tax year, you will be required to provide His Majesty’s Revenue & Customs (HMRC) with your total income at the time of claim. This covers earnings from April 6 to the day of your departure. The British tax authority administers benefits and tax credit payments to people and collects all direct and indirect taxes.
You must notify HMRC of your UK leaving date and previous residence. You must include your phone number. Include the international dialing code, your location, and your UK National Insurance number, if applicable.
You must inform HMRC of the dividends from UK-based corporations, payments from open-ended investment firms, and unit trusts that are authorized in the UK.
You must also include details about the income from trusts, settlements, or estates, interest from national savings and investments, other interest from the UK, receipts for alternative financing from UK banks, building societies, and other deposit takers, and rent from any UK-based property that is worth more than £2,500. You must register for self-assessment.
What happens to your taxes if you leave the UK?
Moving overseas has many concerns. It may be thrilling and stressful. It’s due to the last-minute plans for packing as well as all the financial and other matters you need to settle prior like leaving the UK tax refund.
That’s why you need to be informed that tax collection, payment, administration, and enforcement fall under the purview of HMRC.
Whether or not you typically submit a self-assessment tax return to HMRC determines the procedure for informing them that you are leaving the UK. Therefore, you should typically file a tax return as well as incorporate the supplemental section SA109.
The purpose is to update your residence and domicile status with your self-assessment tax return and complete it as usual. You must also complete and file a P85 form if you don’t usually file tax returns. This helps HMRC determine where and how much to tax you. You’re normally considered “not resident and not ordinarily resident” if you haven’t lived in the UK for three years.
Whether there is a double taxation agreement is important if you will be a tax resident in your new country plus the UK. Notifying HMRC is also vital since you’ll only pay tax in one nation if appropriate.
What are the dates for tax refunds after leaving the UK?
This is important since the strict standards state that you must submit your claim by the deadline or lose any money you owe. You have four years after your departure to receive a UK tax refund.
Before they can return your overpaid income tax, the tax office will require you to file an official claim within the allotted four years. To complete your self-assessment tax return, return to the UK. For numerous reasons, HMRC may require a self-assessment tax return; so, you must complete your final UK tax return before seeking a refund for excess taxes.
Form P85 shouldn’t be required if you file your taxes and give HMRC all the information they require to reimburse any overpaid income tax.
Tax returns may only be filed once the current tax year finishes on April 5. If a person leaves the UK during the tax year, they must file with HMRC after April 5.
How can you get the excess tax on your employment income back?
It is possible to recoup any unpaid taxes and get tax relief on work income if the costs were entirely, solely, and inevitably expended in the execution of your tasks. It is crucial to maintain precise records and proof for such claims.
In the event that your employer is covering the costs, you cannot submit a claim. You must then use the P87 form for these claims or include the information in your annual self-assessment tax return.
For a variety of reasons, including not using your entire personal allowance, you may overpay taxes if you receive employment income through the PAYE system. After the tax year ends, HMRC typically makes an effort to reconcile your tax refund.
Occasionally, they do this by sending a check or a P800 calculation to your last UK address on file. Another option is to request the refund through a direct bank transfer. Make sure your contact information with HMRC is current.
But what if you ceased employment during the year, how can you get your overpaid taxes back?
You may be eligible for a partial income tax refund if you stop working during the tax year and do not expect to return or get any taxable benefits. This refund may be collected immediately instead of at the tax year’s end. More so, the effectiveness is suggested by the employment board.
Claiming tax back on employment expenses
You may be eligible for a number of reliefs to lower the amount of tax that is due on your income from employment. Included in these are business expenses that are incurred solely, exclusively, and inevitably in carrying out the job’s responsibilities.
Any such expense must be documented with proof and records. Also, tax relief is not available if your employer reimburses your work-related expenses. Also, you must know how the employer has more information about work-related expenses. The claims will then be submitted using Form P87 on GOV.UK.
How to get overpaid taxes back when moving out of the UK
Leaving the UK and living or working abroad may refund some of your income tax. It is usually required that you send Form P85 to HMRC. It should be done when you depart the country. You may submit a claim electronically. If you owe income tax, you may use this form to receive a refund.
This makes it easier for you to accomplish the requirements due to the accessible and digitalized methods.
Parts 2 and 3 of your P45, along with Form P85, must be sent to HMRC. You must submit the letter via registered mail or a comparable service, and keep a copy of the completed P85 form and P45 parts 2 and 3. HMRC will refund income tax to you through mail or bank transfer if you are eligible.
If your tax status is complicated, such as if you are self-employed or will continue to receive UK income after leaving, you may need to file a tax return for the year of departure instead of a Form P85. You should call HMRC and explain your position if you’re unsure. They can notify you of any requirements.
Can you get back excess taxes on your pension income?
You may overpay taxes if you receive pension income and use the PAYE system to pay taxes on it. There are a number of causes for this, and the tax basics section offers an overview of common circumstances that may result in an overpayment of taxes on pensions. The process for filing a tax overpayment claim on pension income is also covered in that section.
Can you claim back overpaid taxes on your savings income?
As of April 6, 2016, building societies and banks are required to pay you your interest in full. This indicates that before you receive it, there is no income tax deduction made by them.
With rare exceptions, certain other forms of interest and savings income—like the interest component of PPI compensation payouts—continue to be subject to a 20% tax deduction at the source.
Can you claim tax back in the UK for excess or improperly paid national insurance contributions?
There are specific situations in which you may overpay National Insurance Contributions (NIC). For instance, you may have a certificate A1 indicating your exemption from NIC under EC regulations or the new UK-EU social security coordination protocol, but your UK employer may have still deducted NIC.
NIC, unlike income tax, is computed and paid for every pay period rather than being recalculated against annual thresholds. Due to this, overpayment of the national insurance contribution is rather uncommon, while overpayment of income tax is more typical.
You can use a tool on GOV.UK to request a refund of the national insurance contribution. If you quit your job or are unemployed for the entire tax year, you are not eligible for an NIC refund. Additionally, you are not eligible for an NIC refund merely because you are leaving the UK and moving abroad to live.
In some cases, you might submit and wonder how you will receive the refund. This might make you wonder if it will be paid automatically or with less hassle. However, in some instances, there’s a possibility that your money will not arrive on time. Hence, you will ponder what the next step is that you should take.
You need to remember that your self-assessment tax refund may take weeks or months to arrive. This is even if you filed online and even if you already provided your bank account information.
Hence, repayments may undergo security checks before payout. HMRC will perform security checks, among other things, to confirm that the taxpayer’s and bank account holder’s identities match. This might be especially true for the frequently sizable Construction Industry Scheme (CIS) tax refunds.
Repayment notices stating that the money is being deposited into the specified bank account are occasionally sent out. However, the money is secretly withheld for security checks until the very last minute. Also, your online account may show the repayment as done even when it hasn’t.
Additionally, you have different options. It’s still guaranteed that it’ll advance your tax refund process.
Claim Tax Back When Leaving UK: Final Thoughts
If you obtain a tax return while leaving the UK to relocate abroad, it may be thrilling, but at the same time, you need to be financially secure too. This will make you feel more confident about leaving the UK.
It’s important that you think about claiming your paid taxes in case you think about leaving. Despite being tedious, it’s worth it. To get the tax refund, numerous conditions must be reviewed, and those who qualify will get the money.
The entire thing can be quite a complex process. It would be best to talk to a tax expert and financial adviser to smoothly navigate claiming tax back when leaving the UK.
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