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Get a Tax Refund when you leave the UK: PAYE, P45, P85 explained

In this tax form guide we look at the tax forms you should receive from your employer and what you need to do if you have worked in the UK for a period and then left the UK for employment in a different country. This tax guide explains what you need to do to reclaim any overpaid tax from your employment in the UK.

Have you worked for a while in the United Kingdom (UK)? Have you decided now to return to your country or you have already returned? If that is the case then you've probably paid more tax than you had to and the UK tax office (HM Revenue & Customs) must give you a refund.

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Unlike some other countries, where the employer takes care of this process and returns to you all the taxes you paid in excess on with your final payslip, in the UK it is the employees responsibility, your the employer will not do it for you. You will not receive any notification or have your tax paid back to you automatically from HMRC, if you don't claim the overpaid tax back yourself, the taxes you paid in excess will remain with the British government.

This tax guide explains how to make a claim for overpaid taxes back from HMRC after you have left the UK. We will focus on the refund of the Income Tax or PAYE (Pay As You Earn) you paid, which is the tax deducted from salaries according to your annual gross income.

Why does the UK deduct excess tax?

As the PAYE is an annual tax, the amount of tax you have to pay is calculated on the basis of how much you would earn during the entire tax year. HMRC uses a system called PAYE (Pay As You Earn). PAYE works by estimating your annual income and then splitting it into equally across your payment periods, so, if you are paid monthly, your PAY E income tax is deducted one a month from your salary, so your PAYE is calculated annually, then split into 12 equal parts. This means that income tax is deducted in regular instalments from the first month of the fiscal year, rather than taking the full amount at the end of the fiscal year. When you stop working in the UK, you have paid PAYE tax for an annual income, so you have paid tax on income that you have not received. Let's look at an example:.

£12,000.00 Annual Income tax (PAYE) due in financial year

£1,000.00 The monthly amount deducted through your payslip by your employer. Lets say you worked for six months.

£6,000.00 Six months tax deductions for PAYE

On the surface, that may seem correct but in the UK, you have a tax free threshold called Personal Allowance, when calculating your annual PAYE income tax, the assumption is that you will exceed this threshold. When you only work for part of a year, you will likely not exceed that threshold so you have in fact aid to much tax.

I left the UK and was not aware of this. Can I still claim for a refund?

The first thing you must know is that the tax period in the United Kingdom (UK) begins on 6th April and ends on 5th April the following year. You can only claim a tax refund for a tax year that you have not worked completely. If you worked in the UK some years ago and you were not aware of this, keep reading because you can claim a tax refund from the last 6 tax periods.

I paid too much tax ... What are the next steps?

The steps you must take are the following:

Your tax office: Find out what is the right tax office where you have to submit your claim by postal mail. Your employer's Human Resources department should provide you with that information. If you've worked for some time and have received a P60 before, you can find the information on your P60.

Form P45: Your employer must provide you a P60 when you stop working for them along with your final pay slip. A P45 contains information about your gross salary and details how much tax you have paid in the current tax year upto the point that you finished work in the UK. The tax office will use this information to calculate your tax refund. You must send the original P45 parts 2 and 3 and keep part 1 for your own records.

Form P85: You can download a P85 from HM Revenue & Customs website. The P85 is a form where you basically establish that you are leaving the UK and you have no intention in the short term to return to work there and you won't keep any business activities in the UK that could mean you're still liable to pay taxes in the UK. A P85 also indicates the details about how you would like the overpaid tax payment refunded to you, these include a United Kingdom (UK) bank account deposit or a check.

P60 2024: Guides and Tools

iCalculator's P60 Guides and P60 Calculators include detailed information and guidance to help you understand your P60, identify key parts of the P60, explain how your P60 is calculated and what information you need to know and understand about a P60 as an employee and employer. Our aim with the P60 guides is to provide insight into the correct completion of a P60, whether it be an audit as an employer to ensure your end of year certificates are calculating correctly or as an employee to check that you have paid the right amount of income tax and, if not, how to claim any overpaid tax back.