Claiming a Tax Rebate When Leaving the Country

If you have only worked for part of the tax year you may be eligible to claim a leaving the countrytax rebate when you leave the country.  The official statistics showed that 255,000 non residents left the country in 2008, a 50 per cent increase over the previous year.

You may be eligible for a refund of some of the tax that you paid whilst working in the UK.  Many people do not know that they can often claim back any overpayment of tax that arose from only working part of the tax year.

Arriving in the Country

Everyone that works in the UK is given a tax free allowance. Your tax free allowance is the amount of income that you can earn before you are required to pay any tax. For the current tax year this allowance is £6,475 and next tax year this will increase to £7,475.  If you arrived in the UK towards the end of the tax year (April 5th) you may earn below the tax free allowance, and can therefore claim back any tax you paid from Her Majesty’s Revenue and Customs (HMRC).

Non Residents

You may be eligible for a tax refund if you become non UK resident.  However, becoming a non UK resident for tax purposes is not as straightforward as simply leaving the country.  You will only become non resident:

  • From the day after you leave the UK
  • If you have physically left the country
  • If your visits to the UK are less than 183 days in a tax year and average less than 91 days a tax year over a maximum of four consecutive years

Checks are likely to be done to establish that you have definitely left the UK.  For example, if you retain a property in the UK, HMRC might question you as to your intentions for the property if you have stated you are not planning to return to the country.

Leaving the Country

If you are leaving the UK permanently or indefinitely (leaving for a period of three years but where you have indicated that you may return in the future), you must tell HMRC by contacting the tax office that dealt with your affairs whilst you were in the UK.

You will be asked to fill in the form P85 to determine whether you are entitled to a tax refund.

Your tax office will:

  • Help you establish that you will definitely be a non resident
  • Determine whether you have to complete a UK tax return once you have left the country
  • Review your P85 form to calculate whether you are due a tax refund

Tax treatment of different sorts of income

Even if you become non UK resident, it doesn’t automatically mean that you are not liable for any tax in the UK or that you are due a tax refund.

For example, if you retain a property in the UK which generates a rental income, you will be liable for tax on this income.

However, when you leave an employed position in the UK, you are generally only liable for UK tax on your earnings up to the date that you left the job/UK.

Double Taxation Agreements

Different countries and states have their own tax rules and laws. When you receive income and gains from a source in one country and you are resident in another, you may find yourself in a position whereby you are liable to pay tax in both countries under their different tax laws.

To avoid paying tax twice in this situation, the UK has so-called ‘double taxation’ agreements (DTAs) with a large number of countries.

If you are a resident of a country with which the UK has a DTA, you are likely to be able to claim exemption or partial relief from UK tax on income from certain types of sources. The precise conditions of exemption or relief can be found in the relevant DTA.

What to do next

If you are leaving or have left the UK, you should contact your local tax office to let them know.  They will ask you to complete the P85 form to determine whether you are entitled to a tax refund.  You may have to provide documentation to them to prove your income such as P60 or P45 documents.

You should also remember that the deadline for claiming UK tax refunds is four years.  If you left the UK at anytime within the last four years, you may still be able to claim a tax refund.

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