⚠️ Our Tax Guide for Students guidance has moved to the LITRG website. If you are a student or have a student loan and have a query about any of the issues we cover in this section, please let us know by filling in the Contact Us form.
Claiming a tax refund
If you were working in the UK prior to going abroad, you may want to complete form P85 ‘Leaving the UK – getting your tax right’, to try and trigger a tax repayment (if you are due one).
When should I complete form P85 to get a tax refund?
As discussed on our Notifying HMRC page, completing form P85 will be appropriate if you become UK non-resident from your date of departure or will remain resident in the UK but definitely will not be working again in that tax year. You might be due a tax refund on your pre-departure earnings in these circumstances because if you are an employee, 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 will have paid too much tax when looking at your total annual income.
When should I not complete form P85 to get a tax refund?
If you fall into any of the following situations, we recommend that you do not complete an in-year form P85 but should wait until the end of the tax year (once you know your total earnings) to claim your refund:
1. Will be working but think your foreign earnings will leave you below the personal allowance when added to your other income.
2. Will be working, think that your foreign earnings when added to your other income will exceed the personal allowance but know you will be paying foreign tax at a rate that at least matches the UK rate that you would have paid on that income (typically 20%).
In both these cases, although strictly you should complete a tax return to tell HMRC about the income, there should not be any tax to pay on it. Your UK tax refund position should therefore not be affected by any foreign earnings; however, it is safest to wait until the end of the tax year to double-check the figures (you may need to ask a professional adviser to help you or if you cannot afford one, a charity like TaxAid). Once you are satisfied that your foreign earnings are not going to affect your UK refund position, you can either submit a form P85 or look forward to HMRC’s electronic reconciliation system calculating your repayment at the end of the tax year and automatically issuing you with a cheque.
Waiting until the end of the tax year to do a quick check of your figures may seem a bit over the top but it is better than getting a tax refund, only to have to pay it back to HMRC later on.
In any other case, you may need to file a tax return to fully reconcile your tax position.
Where can I get further help?
We appreciate that this is quite convoluted, so have summarised the thought process in the flowchart below:
Filling in a tax return 2040 by LITRG