If you worked in the UK and decided to return to your home country until at least the end of the tax year, did you know you could actually claim back some UK tax in the form of a tax rebate? Many non-UK Nationals can actually claim back significant amount of money in overpaid tax.
Whether you worked in the UK for a few months or a few years, here’s a short guide to help you understand what you are entitled to by law.
Lets’ first debunk a few myths…
First, you first need to have worked and paid tax in the UK to be entitled to a tax rebate...
If you didn’t pay income tax in the UK in the first place, there isn’t any rebate on tax to be had – a tax rebate is designed to repay any income tax that you may have overpaid.
Secondly, you cannot claim back the entirety of the tax you paid into the UK system during your period of working in the UK. You can however receive back a portion of it, which is the part that you may have overpaid. The chances are that you may have actually overpaid tax in the year that you leave the UK, I’ll explain that point a bit further…
Thirdly, you cannot reclaim the National Insurance contributions that were deducted from your wages. These contributions serve to benefit vulnerable people in the UK, through funding the NHS; Unemployment, Sickness and Disability allowance, as well as State pension. Regardless if you claimed any of these benefits or have a UK State pension or not, this money cannot be refunded in your case.
Why you could be entitled to a tax rebate when leaving the UK
This is because you may not have used up all of your tax-free allowance in the year that you leave the UK. Everyone who works in the UK is entitled to a tax-free allowance (also called a personal allowance), which is the amount of money you can earn without having to pay income tax. For this current tax year, the personal tax-free allowance is £10,000 (it was £9,440 in 2013-14). So if you leave the UK in this current tax year and you paid tax while earning less than £10,000, technically you are entitled to claim it back. Even if you earned over £10,000, you could still have paid too much tax without realising it.
To simplify, HMRC calculates the tax-free allowance by dividing it in 12 equal portions, corresponding to 12 months in the year: £10,000 divided by 12 = £833. What this means is that you don’t pay tax for the first £833 you earn per month, but the government will automatically deduct 20% income tax on any pound you earn in the month over £833. Now, if you only worked 3 months in the tax year, you would have paid too much tax because you would actually have been charged tax on anything you earned over £833 every month, while in reality you might have been earning less than your £10,000 personal allowance in the year.
The good news is that you can claim pack the tax that you overpay in the year that you leave the UK. In fact, even if you have already left the UK, you can still claim tax back going back as far as April 2010. But beware, if you leave it too long, you may lose your entitlement for good so it is best not to delay the process.
There are some strict guidelines from HMRC to allow you to claim a tax rebate. Depending on your personal circumstances, you may have to complete either a P85 form “Leaving the UK – getting your tax right” or fill in a tax return via Self Assessment. Although you can actually undergo the process of claiming back a tax rebate yourself by speaking to HMRC direct, you may find that the forms can be quite daunting and that the overall process might not always prove as straightforward as it first seems. TaxDay’s consultants and accountants have years of expertise in assisting taxpayers successfully claiming tax back from HMRC. As qualified tax agents, not only do we take care of all the correct paperwork, we also manage all tax rebate claims from start to finish, making sure that we chase up HMRC until you receive your tax rebate... and sometimes HMRC can make things a little more complex than anticipated, which is why expert help could prove invaluable to you!
Are you non-British citizen leaving the UK to return to your home country until at least 5th April this year? Speak to one of our accountants on 01634 812 228 to claim your tax rebate or download a free tax pack.