What happens when I leave the UK?
There are a number of tax matters you need to consider when leaving the UK. These include the possibility of obtaining a tax refund and how you repay any student loan you may have when you are abroad.
Following the 2016 European Union (EU) membership referendum in the UK, on 29 March 2017 the UK provided notice to the European Council of its intention to withdraw from the EU under Article 50 of the Treaty on European Union. At the time of writing (in March 2019), the date and terms of the UK’s departure from the EU have not yet been finalised. Therefore, please note that the guidance below reflects the law as it applies before the UK’s departure from the EU.
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Many international students fail to claim a repayment of tax to which they are entitled when leaving the UK, for example, when returning home when they have finished their studies.
Many students who work in the UK do so for only part of the year or they work part-time in several jobs. When this happens the UK Pay as You Earn (PAYE) system may not deduct the right amount of tax and often deducts too much.
Shortly before you leave the UK after studying here, you should complete a form P85 ‘Leaving the UK – getting your tax right’. This form tells HM Revenue & Customs (HMRC) that you are leaving the UK and makes a claim for repayment of any overpaid tax for the year of departure.
If you have a form P45 from a former employer, you should send parts 2 and 3 to HMRC together with form P85.
If you have overpaid tax and claim a repayment, HMRC will send you any tax refund that they owe you, but they will need your up-to-date address or a UK bank account to which they can make a direct transfer. Any repayment will be made in UK currency so make sure your bank account will accept the funds.
You may have overpaid taxes in more than one tax year during your stay in the UK. You can tell HMRC about this when you submit form P85, and ask HMRC to repay you for all the tax years involved. However, there are time limits on when you can claim a tax refund.
You should beware of various companies (often advertising online) which offer to claim back overpaid tax for taxpayers – many are not reputable and others may charge high fees for a service that you can easily do for yourself. There is more information on these companies in our tax refund section.
It is not usually possible to get a refund of NIC, but it might be possible to have them taken into account when determining eligibility for state benefits in another country. This is likely to be the case if the other country is within the European Economic Area or is a country that has a social security agreement with the UK. You may be entitled to benefits from the UK when you retire if you have paid NIC in the UK.
Visit Do students pay National Insurance contributions? for more information.
Visit the section Can I get a VAT refund? for more details about VAT refunds when leaving the UK for a non-European Union (EU) country.
Only limited categories of student are eligible for UK student loans, for example –
- British citizens and people with settled status;
- European Economic Area (EEA) worker;
- refugees, etc., who may also have to meet additional requirements. These further conditions may involve being ordinarily resident in the UK or EEA for three years.
Most international students cannot get a UK student loan. There is more information about course fees and sources of funding on the British Council’s website for international students who wish to study in the UK.
In 1998, the UK introduced income-based or income-contingent loans. The main way of repaying these loans is via the UK tax system. Borrowers have to deal with both the Student Loans Company (SLC) and HM Revenue and Customs (HMRC) when they start paying back what they owe.
Students who are eligible to take out a UK student loan have to make repayments through the UK tax system, in the same way as any other UK student borrower. See our student loans section for further information on how student loans are repaid.
Students who go abroad can no longer make loan repayments via the UK tax system. This means that if you received a UK student loan and you leave the UK for more than three months after finishing your course you must inform the SLC. The SLC will take over the collection of the repayments.
It is important for students to take note of the repayment threshold relevant to the country to which they are going, as it is not necessarily the same as the UK threshold (2019/20 £18,935 per annum for Plan 1 loans and £25,725 for Plan 2 loans). From 2019/20, postgraduate loans are also collected at 6% of earnings above £21,000 per year. Thresholds vary according to comparison calculations between the cost of living in the UK and the other country. The SLC repayment website gives the thresholds.
Similarly, if you have been living abroad and return to the UK for three months or more, you should let the SLC know. This is important because if you find employment in the UK, you might need to start making repayments via the UK tax system again and you will need to cancel any separate arrangements that you have made with the SLC.
There is more information in the student loans section.