Do seasonal workers pay tax?

Updated on 3 November 2019

Migrants

Some migrants come to work in the UK as seasonal workers, which means they find jobs in certain seasons. An example of a seasonal worker is someone who picks strawberries on a farm. Even though you may be in the UK for only a few months, depending on your earnings and other circumstances you may still have to pay tax and National Insurance contributions (NIC) on your wages.

Do seasonal workers pay tax?

When you visit the UK for a short period, the first step to determine your tax liability in the UK is always to establish your UK tax residence status. If you come to the UK for a short time only and for a temporary purpose, you may not become resident in the UK for tax purposes.

Even if you are not UK resident, you will normally have to pay UK income tax on employment income earned from a job you carry out in the UK.

If you are a seasonal worker, you will normally be an employee, and so the employer should pay you via the payroll, deducting income tax and NIC from your wages, under the Pay As You Earn (PAYE) system. The employer will pay the tax and National Insurance contributions (NIC) to HM Revenue & Customs (HMRC) on your behalf.

If you are a seasonal worker, a key question for you to consider is whether or not you are entitled to a UK personal allowance. If you are eligible, in 2019/20 you should only start to pay UK tax on your earnings when they exceed £240 a week or £1,042 a month, depending on your usual pay period. However, the UK personal allowance is ultimately an annual allowance. It is possible to earn in excess of the weekly or monthly limits and have tax deducted from your earnings under PAYE, but for your total taxable earnings for the tax year to be less than the UK personal allowance. In this instance, you are likely to be eligible for a tax refund.

Some people who are not tax resident in the UK can still claim the UK personal allowance, for example, British citizens, nationals of a member state of the European Economic Area, or residents of the Isle of Man or the Channel Islands. You can find a list of the European Economic Area countries on the page EU and EEA countries.

Some people may claim personal allowances under a double taxation agreement. There is a list of agreements for which this is possible on GOV.UK.

Unless you are classed as UK tax resident you will not have to worry about any income arising in your home country being taxed in the UK. However, if you are only temporarily absent from your home country you may remain taxable there on your worldwide income, meaning that your UK earnings could be taxed twice, both in the UK and in your home country.

Before you get too concerned with double taxation, please remember that while you may initially pay tax in the UK under PAYE, it is possible that this will be refunded to you upon your departure from the UK (see below), meaning you will not actually suffer any double taxation issues. If the UK tax is refundable in this way by HMRC, you will not be able to use it to claim double tax relief in your home country.

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Can seasonal workers claim a tax refund?

When you have finished your seasonal work, you may find that you have paid too much tax under the Pay As You Earn (PAYE) system and are able to claim a repayment of tax when you leave the UK. This is because the personal allowance is usually divided throughout the year, so you receive a proportion in each pay packet. If you leave the UK part-way through the tax year, you will not have received your entire tax-free allowance and may have paid too much tax when looking at your total annual income.

You should usually complete form P85 ‘Leaving the UK – getting your tax right’ when leaving the UK (unless, for example, you will be completing a Self Assessment tax return for your year of departure). If you have a form P45 from your previous employer, you should send parts 2 and 3 to HMRC with form P85 so that HMRC can work out if you are due a refund. Form P85 can be found on GOV.UK. You can submit the form online or by post.

If appropriate, HMRC should send you any tax refund that they owe you once they have processed the form. Please note that HMRC do not make bank transfers to overseas bank accounts. You should also beware of various companies offering to claim back tax refunds on your behalf. Many of these companies are not reputable, or they may charge you high fees for a service that you can do for yourself.

Form R43

If you have been not resident in the UK but are entitled to the personal allowance because you are a citizen of a European Economic Area (EEA) country or a resident of a country with which the UK has a double taxation agreement granting the UK personal allowance, HMRC may ask you to complete form R43 to formally claim the UK tax allowance and claim a repayment of UK tax if you have paid too much tax on your UK income.

You can obtain form R43 by telephoning HMRC, or you can download it from GOV.UK. You can also find contact details for HMRC on GOV.UK.

You can find a list of the European Economic Area countries on the page EU and EEA countries.

There is a list of countries that have a double taxation agreement which allows the UK personal allowance on GOV.UK.

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Do seasonal workers pay NIC?

Seasonal workers will normally be liable to pay NIC on their UK earnings, unless they earn less than the ‘Primary Threshold’ (for 2019/20, this is £166 per week or £720 per month). Unlike income tax, NIC is generally assessed per pay period rather than annually.

Therefore, you cannot usually get a refund of the NIC, even if you have only been here for a short period. One exception to this is if you have been sent to the UK by your overseas employer and the terms of a relevant social security agreement state that you should remain in your home country social security system, rather than pay UK NIC.

If you paid NIC during your time in the UK, however, the contributions may help to determine whether or not you are eligible for benefits under another country’s social security system. There is more information on this in the pages on  National Insurance.

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What is the national minimum wage/national living wage?

As with any other employee, the employer must pay you at least the national minimum wage (NMW) or national living wage (NLW). Which is relevant depends on your age. Most employees in the UK over school-leaving age are entitled to be paid at least this minimum rate per hour.

You can find out more about the NMW and NLW on the page What is the national minimum wage?. You can find the current rates on GOV.UK.

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What is auto-enrolment?

Under auto-enrolment, all employers have to offer a pension scheme to their eligible staff – there are no exceptions even for the smallest employers. You can find out more on auto-enrolment on our page Pensions and employees.

However, please note that it is possible for an employer to legitimately postpone offering a pension scheme to their staff for up to three months, meaning that if you are with an employer for a very short period only, for example in a seasonal job, you might not be offered auto-enrolment, even if you are otherwise eligible.

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