Filing a tax return
Sometimes you will need to file a tax return in the UK even though you are a student. Most often this will be because you have received foreign income in the tax year, but there may be other reasons.
Do I need to file a tax return in the UK?
We saw on the Claiming a tax refund page that often, receiving foreign income after you have left the UK will not affect your tax refund position in respect of the UK income you earned prior to going abroad.
Sometimes, though, if you receive foreign income, your tax position will be more complex and you may have to formally reconcile your position with HMRC, for example, where there is an insufficient foreign tax credit (or none at all) to extinguish the UK liability on the foreign income. You can see some examples of where this has happened in Max and Ahmad.
So, let us start with a little background: most people in the UK pay all their tax ‘at source’, for example, through PAYE if they are employed, and are not required to file a tax return. However, where your tax affairs are complicated – and receiving foreign income can make them complicated – you have to complete a formal tax return under the Self Assessment regime. GOV.UK provides guidance on when a tax return needs to be completed.
Strictly, HMRC could insist on a tax return being submitted in any instances where a person has received foreign income. Often, however, there is no UK tax payable to HMRC on the foreign income because of the availability of the personal allowance or double tax relief. In cases where you do not owe any further tax, HMRC will probably not insist that you complete a tax return.
However, if you find yourself in the position of having UK tax to pay to HMRC in respect of foreign income, you will need to complete a tax return to report this. We appreciate that this is quite convoluted, so we have summarised the process in our flowchart below.
Filling in a tax return 2040 by LITRG
How do I tell HMRC I need to complete a tax return?
The onus in the UK is on you, the taxpayer, to tell HMRC if you need to complete a tax return (hence ‘Self Assessment’). You must register for a tax return by 5 October following the end of the tax year in question; otherwise you could incur a penalty. So, if you receive foreign income in the period 6 April 2023 to 5 April 2024 which you need to report on a tax return, you would need to tell HMRC by 5 October 2024. You can register online for Self Assessment or use form SA1.
Upon registration you will receive a Unique Taxpayer Reference (UTR), which you should keep safe. You will need this when completing your tax return.
If you are receiving foreign income and are really unsure as to whether or not you need to complete a tax return, the best thing to do is contact HMRC and advise them of your circumstances in order that they can confirm what, if anything, they want from you.
If you do need to complete a tax return, be aware that it is a legal document and you should take every reasonable care in completing it.
⚠️ It is your responsibility to ensure your tax return is complete and correct.
It is a full reconciliation of worldwide income and it is important not to leave out any sources of income – no matter how small or whether tax has been deducted at source.
Where can I get help?
The UK tax system can be complex, particularly when there is foreign income involved. If you need further assistance with your tax affairs and/or help with completing a tax return, you should ask a professional adviser or if you cannot afford one, the charity TaxAid may be able to help.