You have been temporarily working in the UK and are returning home abroad

If you have been temporarily working as an employee in the UK and are now leaving the UK you may be due a tax refund. It is therefore in your interests to advise HM Revenue & Customs using their Form P85 (see http://www.hmrc.gov.uk/cnr/p85.pdf).

The reason you could be due a refund is that, if you leave the UK part-way through the tax year (before 5 April), you will only have received part of your tax free personal allowance under PAYE. But you may be entitled to a full year’s personal allowance, even though you will not be living in the UK for the full tax year.

Depending on your circumstances, you may be entitled to a full year’s personal allowance even when you leave the UK part-way through the year. Entitlement depends on your home country. There is a list of the countries to which this applies on the HMRC website at http://www.hmrc.gov.uk/cnr/allow_nonres.htm. (The page refers to ‘non-residents’ – that is people who are not living in the UK and are not taxable in the UK).

A useful information source on Income Tax and National Insurance for people leaving the UK is produced by HM Revenue & Customs and you may find some of your answers here: http://www.hmrc.gov.uk/cnr/faqs_general.htm 

How to apply for a refund

If you are leaving the UK part-way through the tax year, and you come from a country listed as entitled to a full personal allowance then you should apply for a refund by completing form P85 and attaching Parts 2 and 3 of your P45 to the form. The P45 is the certificate of pay and tax deducted your UK employer should give you when you stop work. (It’s best to take a photocopy of anything you send to HMRC in case they get lost in the post)

You will usually need to have a UK bank account to accept the tax refund, so you may want to leave an account open, or come to an arrangement with a reliable friend or family member for the refund to be paid into their account.  HMRC can issue a cheque to an address abroad, but you may not be able to cash it through all banks.

Unless there has been a mistake with your tax code in a previous year, you are only likely to get a refund for the current tax year – and this depends on eligibility to the UK personal allowance and leaving the UK part-way through the tax year.

Self-employment in the UK

If you have been self-employed in the UK, you are likely to owe UK tax on any profits you earned for the period to the date of your departure.  You would normally only be due a refund if you worked in the construction industry and had tax deducted at source under the Construction Industry Scheme (see CIS Subcontractor for more information).

Anyone who has been self-employed in the UK will need to submit a final self-assessment tax return, pay any outstanding UK taxes and tell HMRC that they are no-longer self-employed in the UK.

If you do not inform HMRC that you have left the UK and have ceased being self-employed in the UK, HMRC is likely to continue to send self assessment tax returns to your old address. When these are not completed, HMRC is likely to raise estimated tax bills while you are abroad and seek to collect the estimated tax. If you later returned to the UK – particularly if you stay abroad for more than 4 tax years  - you may have difficulty challenging these estimated bills (the time limit for submitting self-assessment tax returns is 4 years from the end of the tax year for which the tax return is issued).

Unpaid taxes

If you leave the UK with unpaid taxes, HMRC has reciprocal arrangements with a number of countries to collect UK taxes from you in your home country. Even where no reciprocal arrangements exist, HMRC can pursue debts in other jurisdictions through the local Courts. The ‘Mutual Assistance in the Recovery of Debt’ (MARD) rules can be found at http://www.hmrc.gov.uk/manuals/dmbmanual/DMBM560000.htm