What happens when I leave the UK?
If you leave the UK after living and working here, you must tell HM Revenue & Customs (HMRC). Here we explain whether or not you have to complete a tax return and whether you might receive a tax refund.
How will I be taxed in my year of departure?
Strictly, UK law deems an individual to be tax resident or not for an entire UK tax year. However, it is possible to split the tax year into a UK part and an overseas part if you are resident in the UK for that year. This allows you to be treated in effect as if you were non-resident for the period after you leave.
For most migrants who have been living and working in the UK, the split-year rules mean that after they leave the UK, they will only be taxable in the UK on any UK-sourced income they continue to have.
You can find more about split-year treatment in our pages on residence and domicile.
What if I do not normally complete a tax return?
If you do not normally complete a Self Assessment tax return, you should complete form P85 'Leaving the UK – getting your tax right', which you can find on GOV.UK. If you were employed in the UK, you should send parts 2 and 3 of form P45 from your last employer to HMRC with form P85. You can complete the form and send it to HMRC or you can submit the form online.
Please be aware that your ex-employer will not be able to give you a replacement P45 if you lose the original. However, they should be to provide a ‘statement of earnings’ on headed paper, which can be used as proof of tax deducted (if required) to reclaim a refund from HMRC.
Even if you do not normally complete a tax return, you should consider whether you should start to do so once you have left the UK. This may be necessary if, for example, you will receive UK-sourced income, like rental income on a UK property (even if you let your main home) or for one of the other reasons mentioned below.
If you need to file a tax return then you need to tell HMRC by 5 October following the end of the tax year (which ends on 5 April).
Will I receive a tax refund?
If you have been taxed under the Pay As You Earn (PAYE) system, during the time you have been working in the UK, then it is very possible that you will be due a tax refund upon your departure from the UK. This is because the personal allowance (£12,500 in 2019/20) is usually divided throughout the year so you receive a proportion in each pay packet. If you only work for part of the tax year or leave the UK part way through a tax year, you will not have received your entire tax-free allowance and will have paid too much tax.
Most migrant workers will be entitled to a UK personal allowance, for example, because they are tax resident here, they are nationals of a member state of the European Economic Area or because they can claim one under a double taxation agreement. There is a list of agreements for which this is possible on GOV.UK.
If you have overpaid tax, HMRC will send you any tax refund that they owe when they have processed the form P85. Occasionally, if you have only been in the UK for a short period, they may ask you to complete a form R43 as well before they will process your tax refund. There is information on form R43 and other methods of claiming a refund of tax on our page How do I claim tax back?.
You should be aware that HMRC will not make payments to overseas bank accounts. See our guidance for further information on how to get your refund if you have left the UK.
HMRC will often use the P45 pay and tax figures (that you should include with the form P85) to calculate any refund that you are due on the basis that it is your only taxable income for the year – even if the information that you give in the form tells them that you are planning to return to the UK and will continue to have UK-sourced income after you have left or will remain UK tax resident.
All of these things mean there could be other income to take account of before the end of the tax year which will affect your overall tax position for the year. Most of the time in these circumstances, HMRC should ask you to complete a tax return. However sometimes they will just issue a tax refund based on your pre-departure earnings. If they do, it is important to treat the refund as an ‘interim’ refund and understand that you may need to pay some or all of it back once your overall position is clear at the end of the tax year. If this applies, you should declare the refunded tax on your Self Assessment tax return.
You should also remember that if you need to file a tax return but you are not sent one by HMRC to complete then you need to tell them by 5 October following the end of the tax year.
If you normally complete a Self Assessment tax return, you should complete a tax return as normal, once you have all the information for the tax year. You should not normally complete a form P85 in this instance. If you are due a refund, then it will be calculated as part of the tax return process.
You can find some information on who should be completing a tax return on our page Who has to complete a Self Assessment tax return?.
If you are leaving permanently or indefinitely, you should enter the date that you departed the UK on the tax return, so HMRC can close down your Self Assessment record (if appropriate) and stop sending you tax returns to complete. If you have been self-employed, you should make sure that you enter the date that you ceased your UK self-employment in your tax return.
If you are planning to return to the UK in the near future, or you will continue to have UK-sourced income after you have left or will remain UK tax resident, you may need to keep your Self Assessment record open. However your tax affairs could be complicated and you may need to seek professional advice to complete your tax return. We tell you how you can find a professional tax adviser in our Getting Help section.
What about tax refund companies?
Beware various companies offering to claim back tax refunds for you. Many of these companies may charge high fees for a service that you can do for yourself without any cost.
There is more information about these companies in our tax basics section.
How does National Insurance work if I leave the UK?
If you intend to claim a UK state pension or to return to live in the UK in the future, you need to decide whether or not you want to continue to pay UK National Insurance contributions while you are overseas to maintain your contributions record (assuming you are eligible to do so).
You may be able to pay voluntary National Insurance contributions provided you either lived in the UK for a continuous three year period or you paid National Insurance contributions for three years before you went overseas. For more information, visit GOV.UK.
There is further information about how National Insurance works if you leave the UK in our pages on National Insurance, including specific information for European nationals on using UK National Insurance contributions to help qualify for benefits in other countries and guidance on what UK state pension/benefits your National Insurance contributions might entitle you to in the future.