If you were seconded to work in the UK branch or subsidiary of an overseas company, you could be due a significant tax rebate. If this is your case, here’s a quick guide to help you claim back from HMRC the portion of income tax that you may have overpaid during your secondment.
What does “secondment” mean?
A secondment is where an employee temporarily transfers to another job for a defined period of time and for a specific purpose.
The individual who has been seconded remains the employee of the original employer during the period of secondment.
For the purpose of this blog, we discuss the case of non-British workers who are requested by their employer to come and work for the UK branch or subsidiary of the company, for a definite period of less than 24 months. During the period of secondment, these employees would normally be remunerated in GBP. They would also return to their own country to resume their normal occupation for the same employer.
Examples of work secondments in the UK
... You were tasked by your employer to receive some specific training in the UK for a few months, for career development purposes or to gain some skills or some experience.
... You were requested by your employer to deliver some specific training to your British colleagues.
... You were asked to take the lead in a project taking place in the UK.
... You were asked to work in the UK to cover for a British colleague’s short-term absence.
Why you would be entitled to claim some of your UK tax after a period of work secondment in the UK
To simplify, this is because you would not have received your personal tax-free allowance whilst you were working in the UK. As a result, you would probably have been taxed at source at 20% rate for every pound you earn, which is unfair as every UK worker is entitled to earn a tax-free amount every tax year. You would usually be entitled to claim back your overpaid tax (not all the tax you paid in the UK) once your period of work secondment ends in the UK.
Also – and this is important – some of the expenses you may have incurred during your work secondment may be tax deductible if you were not already reimbursed by your employer i.e. Rent; Council tax; Utility bills.
What should I do to claim back tax after a period of secondment in the UK?
According to HMRC’s rules, you would normally need to complete a Self Assessment tax return for each tax year covered by your period of secondment. For example, if your secondment in the UK started in November 2012 and ended in June 2013, your secondment period would cover 2 tax years (2012-2013 and 2013-2014). This means you would be able to claim back any overpaid tax over two tax years, not one.
There are strict and complex rules in place to reclaim any overpaid tax from HMRC (Her Majesty’s Revenue & Customs, which is the name of the UK tax office) following a period of work secondment in the UK. Obtaining a repayment of overpaid income tax from HMRC is commonly known as a tax refund or tax rebate.
If you’ve already informed HMRC that you left the UK after a period of work secondment, the chances are that they would have sent you a Unique Tax Reference (UTR) number. This number may have been sent to you by post to your last known UK address (if you told HMRC) or to your address overseas. NEVER ignore HMRC’s communications. Once you have been issued a UTR number, you are then legally requested to complete a tax return for each tax year covered by your period of secondment in the UK. If you fail to submit a tax return that is requested from HMRC, heavy financial penalties may be imposed on you, which would in effect wipe out any tax rebate you may be owed; in some cases, you could even end up out of pocket.
If you still haven’t told HMRC that left the UK after a period of work secondment, it may not be too late to start the process. You can claim back any overpaid tax up to 4 years after your secondment ended. If you decide to claim a tax rebate after 4 years has lapsed, you would lose your entitlement for good.
To summarise, you MUST fill in a tax return if HMRC has already issued you with a UTR number. If you haven’t told HMRC about your work secondment in the UK, you have up to 4 years to make a claim for a tax rebate.
Who should I contact to start a UK tax rebate claim?
You can contact HMRC directly by post or by telephone to start a claim for a tax rebate. Alternatively, you can use TaxDay’s specialist services to submit a claim, on your behalf. As a registered tax agent with HMRC, we ensure all procedures, official paperwork (including tax returns) and subsequent chasing up on the process of your claim is done at our end, saving you time, money and stress. Please be aware that this is specialist area with many possible variables that may include residency issues.