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How to Recover UK Tax When Leaving the UK Mid-Tax Year

If you’ve been working in the UK as an employee and had tax deducted from your pay, but you’re planning to leave the UK partway through the tax year, you might be eligible to reclaim some of the tax that was taken from your earnings. The UK operates a “pay as you earn” (PAYE) system where tax is automatically deducted from your salary. However, if you leave the UK mid-tax year, you might have paid more tax than necessary because the system assumes you’ll be working the whole year.

Here’s a simple step-by-step guide to help you reclaim your overpaid tax:

1. Determine Your Residency Status

Before applying for a refund, confirm that you will be classified as a non-resident for tax purposes after leaving the UK. Generally, if you leave and are not expected to return for a full UK tax year (6 April – 5 April), or if you meet specific criteria set out in the Statutory Residence Test (SRT), you may be considered a non-resident.

2. Notify HMRC of Your Departure

To begin the process of reclaiming your tax, you’ll need to inform HMRC that you’re leaving the UK. You can do this by completing a form called P85. The P85 form is used to tell HMRC about your move abroad and to claim any tax refunds you’re entitled to.

You can submit the form online via the HMRC website or by post. Make sure to include:

  • Your P45 (you’ll receive this from your employer when you leave work),
  • Details of your employment and salary,
  • Your new address abroad.

3. Complete the P85 Form

The P85 form will ask for details like:

  • Your National Insurance number,
  • Date you plan to leave the UK,
  • Details about whether you plan to work abroad or if you’ll return to the UK at any point.

It’s essential to provide accurate information to avoid delays. The P85 is crucial because it lets HMRC know your situation and helps them calculate any refund.

4. Provide Your P45

After you leave your job, your employer should give you a P45. This document shows how much tax you’ve paid on your salary in the tax year up until your departure. You need to submit Part 2 and 3 of your P45 with your P85 form to help HMRC calculate any potential refund.

5. Wait for Your Tax Refund

Once HMRC processes your P85 and P45, they will review your tax record and calculate whether you are owed a refund. If you’ve overpaid tax, HMRC will issue a refund, usually paid directly into your bank account. This process can take a few weeks to a few months, depending on how quickly your case is reviewed.

6. Keep Records and Check Eligibility

Even after leaving the UK, it’s a good idea to keep records of your tax affairs. If you return to the UK in the future or need to check your tax status, having these documents handy will be helpful.

You might be eligible to reclaim tax if:

  • You leave partway through the year,
  • You won’t earn further UK income for the rest of the tax year,
  • Your total UK earnings for the year fall below the personal allowance (currently £12,570 for the 2023/24 tax year).

7. Seek Professional Advice if Unsure

While the process is relatively straightforward, there may be situations where the tax rules can get more complicated (for instance, if you have income from UK property or investments after you leave). In such cases, it’s advisable to consult with a tax professional to ensure you’re fully compliant and that you maximise any potential refund.

2 thoughts on “How to Recover UK Tax When Leaving the UK Mid-Tax Year”

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