Tax When Leaving the UK

Informing the Correct Authorities

A very common question many people have when moving abroad is whether they should inform the correct Government authorities. Many simply leave the country, never letting their local tax office know they've gone. The reasons behind this vary for each individual, but generally in order to tie up any loose ends and keep things official, it's better to inform the relevant people you've become a non-resident of the UK. The benefits of declaring your move abroad range from simply eradicating future personal mail being sent to your previous address, to perhaps obtaining a sizeable tax rebate.

Form P85 for Those Leaving the UK

For the majority of people, the main form that you must fill in is form P85. This form will allow you to obtain any tax refund you're owed and to work out if you'll become non-resident, thus becoming free from further tax returns. You can obtain this form from your local tax office, or it's available to download online from the HRMC website. It isn't difficult to fill the form in, so you shouldn't require the services of an accountant to do so. You will also need to provide your P45 along with the form and a date of departure from the UK.

Sending Your Information

Once you have completed the P85 form that explains you're leaving the UK, send the form back to your original tax office that usually deals with your enquiries. If you aren't sure who previously dealt with this, have a look at your P45 or P60 under the PAYE reference field. This will provide you with 3 digits that correlate with your tax office number. You can then simply enter the number online at the HRMC website and it will provide you with the full address. It's best to start this process around 3 months before you emigrate. This allows for any possible complications to be sorted out whilst you're still in the UK.

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Becoming a Non-Resident for UK Tax Purposes

When you leave the UK to move abroad, you'll be considered a non-resident from the day after you leave. In order to prove this, you must be able to show that you left the UK to stay abroad permanently, or that your working year and absence lasts at least an entire tax year abroad. You also can be considered non-resident if your UK visits are less than 183 days in a tax year and average less than 91 days a tax year over four consecutive years. If you're in doubt about this, a tax advisor will be able to help further.

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Self-Employment and Emigration

If you're self-employed in the UK, tax matters can be slightly more complicated when you're leaving for good. You will still need to fill in form P85, but you may be required to continue to fill in self-assessment tax returns for a period of time whilst in your new home abroad. This will depend on when you ceased business in the UK, or whether you're still trading. You must also let your local tax office know that you've left the country so they can remove you from their system. If you don't, you may find yourself incurring the £100 fine for not returning your self-assessment form in due time.

Obtaining Your Tax Rebate

Many people who emigrate and fill in form P85 are pleasantly surprised to find that they receive a tax rebate. As monthly PAYE tax is based on an estimate of the tax due on your salary for a full 12 months, if you leave before then, you may have overpaid. You will then receive a tax rebate that can be paid directly into your account or sent to you via cheque. The amount due will differ dependent on your salary, the number of months left in the tax year and other aspects.

UK Tax and Other Countries

Each individual country will inform you of the new tax rules you will follow whilst there. Many have a Double Taxation (DT) treaty with the UK that means you won't have to pay tax in both countries if you have income from one and reside in another. If in any doubt, check with your local tax office as getting it organised can alleviate unnecessary stress. As mentioned previously, form P85 is the most important piece of paper you'll need to obtain before leaving the UK for good and enjoying your new life abroad.

The Next Step

Now that you have read through the advice above, you might want to put it into practice. Our Moving Abroad Checklist Builder lets you build a personalised checklist for emigrating. Covers visas, finances, healthcare and more. Try it now →