Claiming a tax refund
If you were working in the UK prior to going abroad, you may want to complete form P85 to try and trigger a tax repayment (if you are due one).
As discussed in our 'Notifying HMRC' section, this will be appropriate if you become UK non-resident from your date of departure or remain resident to departure but definitely will not be working again in that tax year. You might be due a tax refund in these circumstances because the personal allowance is usually divided throughout the year so you receive a proportion in each pay packet. If you subsequently decide to leave the UK part-way through the tax year, you will not have received your entire tax-free allowance and will have paid too much tax when looking at your total annual income.
If you fall into any of the following situations, we recommend that you do not complete an in-year form P85 but should wait until the end of the tax year (once you know your total earnings) to claim your refund:
- Will be working, but think your foreign earnings will leave you below the personal allowance when added to your other income.
- Will be working, but think that your foreign earnings when added to your other income will exceed the personal allowance but know you will be paying foreign tax at a rate that at least matches the UK rate that you would have paid on that income (typically 20%).
In both these cases, although strictly you should complete a tax return to tell HMRC about the income, there won't be any tax to pay on it. Your UK tax refund position should therefore not be affected by any foreign earnings; however, it is safest to wait until the end of the tax year to double-check the figures (you may need to ask a professional adviser or a body like TaxAid to help you). Once you are satisfied that your foreign earnings are not going to affect your UK refund position, you can look forward to HMRC’s electronic reconciliation system calculating your repayment at the end of the tax year and automatically issuing you with a cheque. Alternatively, you can trigger this process by contacting HMRC or by completing their online form.
Waiting until the end of the tax year to do a quick reconciliation may seem a bit over the top but it is better than getting a tax refund, only to have to pay it back to HMRC later on.
We appreciate that this is quite convoluted, so have summarised the thought process in a flow chart.
In any other case, you may need to file a tax return to fully reconcile your tax position.