Understanding the P85 Form
The P85 form is an essential document for individuals leaving the UK, ensuring their tax affairs are correctly handled. This form is used to inform HM Revenue and Customs (HMRC) about an individual's departure from the UK and to claim any tax refund due. In 2023, understanding the P85 form has become more relevant than ever due to various updates and the increasing mobility of the workforce.
P85 is a form that you must submit to HMRC if you are a UK taxpayer and intend to move abroad. If you've left the UK, you might be eligible to claim tax relief or a tax refund. This process involves informing HM Revenue and Customs (HMRC) about any UK income you continue to receive. You can do this by using the online service or by filling in the P85 postal form. In the P85 form, you will have to answer questions about your tax status and residence so that your tax information can be updated.
If you've left the UK, you might be eligible to claim tax relief or a tax refund. This process involves informing HM Revenue and Customs (HMRC) about any UK income you continue to receive. You can do this by using the online service or by filling in the P85 postal form.
Who Should Not Fill the P85 Form
You should not fill in this form if you normally live in the UK and are going abroad for short periods, for example on holiday or a business trip. Also, if you have completed, or are required to complete a Self Assessment tax return for the tax year that you left, you should not fill in this form.
Understanding Eligibility for Claiming Overpaid Tax in the UK Through the P85 Form
Claiming back overpaid tax is a crucial aspect of managing your financial affairs, especially when leaving the UK. The P85 form is a key tool in this process, designed to facilitate tax refunds for those who are eligible. This comprehensive guide explores who is eligible to claim back any overpaid tax in the UK through the P85 form.
Basic Eligibility for P85 Form
The P85 form is specifically for individuals who are:
Leaving the UK: Those who are moving out of the UK, whether for employment, retirement, or extended travel.
Working Abroad: Individuals planning to work full-time abroad for at least one full tax year.
Previously Employed in the UK: Those who have been employed in the UK and paid taxes during that period.
Specific Scenarios for Eligibility
End of UK Employment: If you have stopped working in the UK and are moving abroad, you are eligible to claim overpaid tax.
Non-return to the UK: Individuals who leave the UK without any definite plans to return may be eligible, as their tax status changes.
Retirees Moving Abroad: Retired individuals who move out of the UK and receive pensions are eligible to claim through P85.
Eligibility for Part-Year Residents
Leaving Partway Through the Tax Year: If you leave the UK partway through the tax year, you might have overpaid tax due to the way income tax is calculated and can claim it back.
Split-Year Treatment: This applies to those whose residency status changes partway through a tax year, potentially making them eligible for a refund.
Non-Eligibility Criteria
Continuing UK Income: If you continue to have a significant income source in the UK, like rental income, you may not be eligible to claim a refund through the P85 form.
Short-term Travelers: Individuals leaving the UK for a short period, such as tourists or short-term business trips, are not eligible.
Special Considerations for Self-Employed Individuals
Self-Employment Tax Payments: Self-employed individuals who have made advance tax payments may be eligible for a refund if they cease their UK activities and move abroad.
Final Tax Assessment: It's important to complete a final tax assessment to determine if any tax refund is due.
Students and Researchers
Students Studying Abroad: Students leaving the UK for their studies can claim a refund if they have worked and paid taxes in the UK.
Researchers on International Projects: Researchers moving abroad for projects, provided they had a taxable income in the UK, may be eligible.
Contract Workers and Temporary Assignments Abroad
Short-term Contracts Abroad: Individuals on short-term contracts abroad, exceeding a tax year, can claim back overpaid tax through the P85.
Temporary Assignments: Those on temporary assignments abroad, with no income in the UK, are eligible.
Impact of Double Taxation Agreements
Residents in Double Taxation Treaty Countries: If you move to a country with a double taxation agreement with the UK, this can affect your eligibility and the amount of refund.
Reporting Requirements: Understanding the reporting requirements in both the UK and the new country of residence is crucial.
Documentation and Proof of Eligibility
Proof of Leaving the UK: Evidence such as travel tickets, employment contracts abroad, or residency documents in another country may be required.
Employment and Tax Records: P45 or other tax documents showing your income and taxes paid in the UK are necessary.
Eligibility for claiming back overpaid tax in the UK through the P85 form encompasses a wide range of scenarios, from employment cessation to moving abroad for retirement or education. Understanding your specific situation in relation to UK tax laws is vital in determining your eligibility. Individuals who find themselves in these circumstances should consider filing a P85 form to ensure they are not paying more tax than necessary and to claim any refunds they are entitled to. This process not only aligns with legal compliance but also ensures financial prudence as you transition from the UK to living abroad.
Which Tax Refunds are Eligible for Claim through P85 in the UK
When leaving the UK, understanding the types of tax refunds you can claim through the P85 form is crucial. This form is a pivotal tool for those who have overpaid tax and are seeking a refund. This detailed guide explores the various kinds of tax refunds that can be claimed through the P85 form in the UK.
Income Tax Refund
Overpayment on Employment Income: The most common refund claimed via the P85 is for overpaid income tax. This often occurs when you leave the UK partway through the tax year, as tax is typically calculated on an annual basis.
Tax Paid on Pensions: If you've paid tax on a UK pension but have left the country, you may be eligible for a refund for the part of the year when you were not a UK resident.
Emergency Tax Code Refunds: Often, when starting a new job or ending employment, you may be put on an emergency tax code, leading to overpayment which can be reclaimed.
Capital Gains Tax (CGT) Refund
Overpayment on Property Sales: If you've sold property in the UK and have paid CGT but are no longer resident in the UK, you may claim a refund for the period you were not resident.
CGT on Personal Belongings: Claims can also be made for overpaid CGT on the sale of personal belongings if the individual has left the UK.
National Insurance Contributions
Refund for Overpayment: While less common, there are scenarios where you might overpay National Insurance contributions, particularly if you leave partway through the tax year.
Class 1 Contribution Refunds: These are for employees and are refundable under certain circumstances, particularly in cases of overpayment or erroneous calculation.
Refunds for Students and Researchers
Tax Paid on Part-time Work: Students who worked part-time and paid tax may be eligible for a refund when they leave the UK, particularly if their annual income was below the tax-free allowance.
Research Grants and Stipends: Researchers may claim refunds on tax paid on grants or stipends if they leave the UK and their income falls below the taxable threshold.
Tax on Savings and Investments
Tax Paid on Savings Interest: If you have paid tax on savings interest but are no longer a UK resident, you might be eligible for a refund.
Dividends from UK Companies: Tax paid on dividends from UK companies can be reclaimed if you’ve left the UK and fall below the tax threshold.
Tax Refunds for Self-Employed Individuals
Overpayment on Self-Assessment: Self-employed individuals who have made advance payments on their tax bill may be eligible for refunds if their actual income was lower than estimated.
Capital Allowances and Expenses: Claims for overpayment can also include incorrect calculations of capital allowances or business expenses.
Refunds for Temporary Workers and Contractors
Overpayment Due to Short Contracts: Those on short-term contracts may overpay tax due to the temporary nature of their work and can claim this back when they leave the UK.
Tax on Contract Earnings: Contractors who leave the UK may be eligible for refunds on tax paid on earnings during the period they were non-resident.
Tax Refund on Overpaid Pay As You Earn (PAYE)
PAYE Overpayments: If you were taxed under the PAYE system and overpaid due to leaving the UK, you can claim this back.
Refund of Tax on Last Salary: Often, the last salary received in the UK can be taxed incorrectly, leading to a possible refund.
Special Circumstances
Marriage Allowance Refunds: If you were receiving a marriage allowance and leave the UK, you may be eligible for a refund on this allowance.
Refund on Tax-free Allowance: If your income was below your tax-free allowance during the tax year of your departure, you can claim back any tax paid.
The P85 form facilitates a range of tax refunds for individuals leaving the UK. It covers various scenarios from employment income, capital gains, and National Insurance contributions to specific cases like students, researchers, and self-employed individuals. Understanding the types of tax refunds that can be claimed is essential for ensuring you are not disadvantaged financially when you move abroad. It's about reclaiming what is rightfully yours and ensuring that your tax affairs are settled appropriately as you transition to a new phase in your life outside the UK.
Key Updates in 2023
Online Submission and Tracking: In 2023, the HMRC emphasizes the convenience of claiming online with a Government Gateway user ID. This approach offers an efficient way to submit the P85 form and track the progress of the claim.
Print and Post Option: For those who prefer or need to submit the form physically, the process involves starting the claim online, printing the form, signing the declaration, and including relevant documents like the P45 before posting it to HMRC.
Repayment Process: If a repayment is due, HMRC will either pay the individual directly or to a nominee. However, they do not cover any fees related to currency conversion or international transfers.
Rejecting Form P85: The P85 form should be rejected if there is a continuing source of UK income. In such cases, the individual is advised to complete the Self Assessment Return issued at the end of the tax year.
Acceptance for Early Settlement: If a taxpayer has left the UK and all sources of UK income have ceased, the completed P85 form can be accepted as a request for an early settlement.
Importance of P85 in Tax Management
The P85 form plays a crucial role in ensuring that individuals do not overpay tax when leaving the UK. It helps in reconciling an individual’s tax position, potentially leading to a tax refund if they have overpaid during the tax year. This form is particularly important for those who leave partway through a tax year, as it helps HMRC understand their income and tax paid during that period.
The Process of Completing and Submitting P85
Before You Start
Before you start to complete the form, whether online or postal, it's recommended to read the guidance about tax if you leave the UK to live abroad. This will help you understand if you can make a claim and what information you need to provide.
Also, ensure you’re using an up-to-date browser to avoid any technical issues.
Preparing to Fill Out P85
Before filling out the P85 form, individuals should gather all necessary information and documents. This includes:
Personal Details: Name, National Insurance number, and contact information.
Employment History: Details from the P45 form, if available, which is provided by the employer when leaving a job in the UK.
Tax Information: Details of any UK income and tax paid during the tax year.
Online Submission Process
Creating a Government Gateway ID: To use the online service for submitting the P85 form, individuals need a Government Gateway user ID and password. This ID can be created when using the service.
Filling in the Form: The online form requires details about employment, income, and tax paid in the UK, along with plans for staying abroad.
Submission and Tracking: After submitting the form, a reference number is provided, which can be used to track the claim's progress.
Print and Post Method
For those who cannot or prefer not to use the online service, the P85 form can be submitted by post. This involves printing the form after starting the claim online, signing the declaration, attaching the P45 form, and mailing it to HMRC.
What Happens After Submission
Processing by HMRC: HMRC reviews the submitted form and calculates if the individual is due for a tax refund.
Repayment Process: If a tax refund is due, HMRC will process the payment either directly to the individual or to a nominated person.
Considerations for Repayment
When expecting a tax repayment, it is essential to provide accurate bank details and addresses to ensure smooth processing. HMRC will not cover any fees for converting the repayment into another currency or transferring it abroad.
Scenarios and Tips for Completing the P85 Form
Common Scenarios for Using P85
Understanding various scenarios where the P85 form is applicable is crucial for taxpayers. Here are some typical situations:
Leaving the UK for Employment Abroad: Individuals moving abroad for a full-time job for at least one tax year.
Retiring Abroad: Those who retire and move out of the UK permanently.
Extended Travel: Individuals who leave the UK for an extended period but do not necessarily have a fixed employment abroad.
Self-Employment Abroad: Self-employed individuals moving their business activities outside the UK.
Each scenario requires a tailored approach to filling out the P85 form, as the circumstances of departure and income status vary.
Tips for Accurate Completion
Detailing UK Residency Status: Be clear about your residency status in the UK, including any homes you still own or rent.
Declaring All Income Sources: Mention all UK income sources, even if they are small or irregular.
Clarifying Future Plans: If you plan to visit the UK frequently or retain financial ties, this should be clearly stated.
Understanding Tax Implications: Be aware of how your move affects your UK tax status, especially if you have multiple income sources or are self-employed.
Avoiding Common Mistakes
Inaccurate Information: Ensure all personal details, income, and tax paid are accurately reported.
Omitting Relevant Documents: Attach all necessary documents, such as the P45, or explain their absence.
Ignoring Continuing UK Income: If you have a continuing source of UK income, understand how this affects your eligibility for P85 and your overall tax situation.
Pay your UK Taxes as a Non-Resident
You may have to pay tax in the UK even if you don't live. For example, if you have income from renting a property in the UK, you will still have to pay tax in the UK. You may wish to continue paying the National Insurance (NI) abroad when you return to the UK and claim certain government benefits, such as a pension. a state pension. Remember to contact HMRC with your NI number if your circumstances change while you are abroad e.g. if you move or change your marital status.
How Do I Get a P85 Tax Refund?
If you owe a tax refund because you leave the UK, it will be refunded to you after you have completed your P85 tax return or self-employment. We can help you complete your P85 by reviewing your personal circumstances and making sure the right forms are completed at the right time.
Using the Online Service
The online service is a convenient way to claim tax relief or a tax refund. To use this service, you need a Government Gateway user ID and password. If you do not have a user ID, you can create one when you use the service. If you use the online form, you’ll get a reference number that you can use to track the progress of your claim.
Using the P85 Postal Form
If you prefer to use the postal service, you can fill in the form p85 on-screen, print it off, and then post it to HMRC. However, you need to fill in the postal form fully before you can print it. You cannot save a partly completed form, so make sure you have all the information you need before you start to fill it in. Once completed, send your claim to the address shown on the form.
Tracking Your Claim
If you use the online form, you'll receive a reference number that you can use to track the progress of your claim. This allows you to stay updated on the status of your claim and know when to expect your tax refund.
Understanding Tax Residency and Non-Residency
Determining Tax Residency Status
Your tax residency status in the UK significantly impacts your tax obligations. The Statutory Residence Test (SRT) is used to determine your status. Factors like the number of days spent in the UK, work ties, and other connections are considered.
Non-Residency and Its Implications
Becoming a non-resident for tax purposes means you're generally no longer taxed on foreign income. However, if you have UK income (like rental income), you may still owe UK taxes on that income.
Transitioning from Resident to Non-Resident
This transition can be complex, especially if you maintain significant ties to the UK. It's important to understand the split-year treatment, which applies in the year of your move.
Tax Obligations for Non-Residents
Even as a non-resident, you might have tax obligations in the UK, particularly if you have:
Rental Property in the UK: Income from this must be declared, and appropriate taxes paid.
UK-Based Employment: If you continue working for a UK employer while abroad, this could affect your tax status.
Investments in the UK: Interest, dividends, and capital gains from UK sources may still be taxable.
International Considerations
Double Taxation Agreements
The UK has double taxation agreements with many countries, which ensure you don't pay tax twice on the same income. Understanding how these agreements apply to your situation is crucial.
Reporting Foreign Income
If you become a non-resident but still earn income in the UK, you must report this to HMRC. Depending on the double taxation agreement, you may also need to report this income in your new country of residence.
Seeking Professional Advice
Given the complexities of tax laws and residency status, seeking advice from a tax professional is often beneficial, especially if your situation involves multiple countries or significant assets.
Troubleshooting and Resources for P85 Form
Dealing with Common Issues
When filling out and submitting the P85 form, individuals may encounter various issues. Here's how to address some common ones:
Missing or Incomplete Information: Double-check all entries before submission. If information is missing or incomplete, HMRC may contact you for clarification, delaying the process.
Delayed Responses from HMRC: High demand periods can lead to delays. Use the reference number provided to track your claim and contact HMRC if necessary.
Discrepancies in Tax Calculations: If you believe there's an error in your tax calculation after submitting the P85, contact HMRC with detailed information about your concern.
Resources for Assistance
HMRC Website: A comprehensive resource for up-to-date information, guidelines, and contact details.
Tax Advisors: Professional tax advisors can provide personalized guidance, especially in complex situations.
Online Forums and Communities: These can be a source of peer advice and shared experiences.
Government Gateway Helpdesk: For issues related to online submission or account problems.
Final Thoughts and Best Practices
Ensuring a Smooth Tax Transition
Early Preparation: Start gathering information and filling out the P85 as soon as you know you'll be leaving the UK.
Accurate and Complete Information: This minimizes delays and errors in processing your form.
Understanding Your Tax Obligations: Be clear about your continuing tax obligations in the UK, especially if you have income sources or assets there.
Staying Informed and Compliant
Regularly Check for Updates: Tax laws and procedures can change, so stay informed about any new developments that might affect you.
Maintain Records: Keep copies of all documents and correspondence related to your tax affairs.
Plan for Future Returns: If you plan to return to the UK, be aware of how this will affect your tax situation and plan accordingly.
Long-Term Considerations
Impact on Retirement and Pensions: Understand how leaving the UK affects your pension and retirement plans, especially if you have paid into the UK pension system.
Estate Planning: Consider the implications of your residency status on inheritance tax and estate planning.
Continued Financial Ties: If you maintain bank accounts, investments, or property in the UK, understand the ongoing tax implications.
Navigating the P85 form and understanding your tax obligations when leaving the UK can be complex. By following the guidance provided in this three-part series, taxpayers can ensure they remain compliant with UK tax laws while minimizing potential issues. Whether you're moving abroad for work, retirement, or extended travel, being well-informed and proactive in managing your tax affairs is crucial for a smooth transition. Remember, when in doubt, consulting with a tax professional can provide clarity and peace of mind.
The Importance of Professional Help for P85 Form in the UK
Navigating the complexities of tax affairs can be daunting, especially when it involves leaving the country. The P85 form is a critical document for UK taxpayers planning to move abroad, and seeking professional help to manage this process can be incredibly beneficial. This article delves into the reasons why enlisting professional assistance is a wise decision for dealing with the P85 form in the UK.
Understanding the Complexity of Tax Laws
Expertise in Tax Legislation: Tax laws are complex and constantly evolving. Professionals stay updated with the latest changes, ensuring compliance and avoiding potential legal pitfalls.
Personalized Tax Planning: Every individual's tax situation is unique. Professionals can provide tailored advice based on your specific circumstances, optimizing your tax position.
Navigating International Tax Implications
Dealing with Double Taxation: When moving abroad, the risk of being taxed in two countries is a real concern. Tax professionals understand the nuances of double taxation agreements and can guide you on how to benefit from them.
Managing Foreign Income Reporting: If you have income sources both in the UK and abroad, reporting can get complicated. Professionals can help in correctly declaring income in multiple jurisdictions.
Maximizing Tax Efficiency and Refunds
Identifying Tax Deductions and Credits: Experts are skilled at identifying potential deductions and credits you may be eligible for, which can significantly reduce your tax liability.
Facilitating Tax Refunds: If you are due a refund, a professional can ensure the process is smooth, advising on the necessary steps and documentation.
Reducing Errors and Delays
Accuracy in Filing: Mistakes in tax forms can lead to delays or inquiries from HMRC. A professional ensures accuracy, reducing the likelihood of errors.
Efficient Handling of Complex Cases: If your tax situation is complicated, perhaps due to multiple income sources or unclear residency status, professional help can navigate these complexities efficiently.
Providing Representation and Support
Dealing with HMRC: Tax professionals can represent you in communications with HMRC, which is particularly beneficial if issues arise.
Continuous Support and Advice: Tax situations can evolve, especially when living abroad. Ongoing support from a professional can help manage these changes effectively.
Assisting with Documentation and Compliance
Gathering and Organizing Documents: Professionals can help identify and organize the necessary documents required for the P85 form and related tax matters.
Ensuring Compliance: They ensure that all the filings are in line with current laws and regulations, helping you avoid penalties for non-compliance.
Stress Reduction and Time Savings
Alleviating the Burden: Handling tax affairs can be stressful. Outsourcing this task to a professional can provide peace of mind.
Saving Time: The time spent understanding tax laws and filling out forms can be significant. A professional can handle these tasks more efficiently, allowing you to focus on other aspects of your move.
Planning for Future Tax Implications
Future Tax Planning: Professionals can provide advice on how your move abroad will impact your future tax obligations, both in the UK and in your new country of residence.
Long-Term Financial Planning: They can also assist in broader financial planning, including pensions, investments, and estate planning, considering your international mobility.
Assisting with Specific Scenarios
Retirement Planning: If moving abroad for retirement, tax professionals can advise on how this impacts your pension and retirement savings.
Business Owners and Self-Employed Individuals: For those who are self-employed or running a business, professional advice is crucial to manage business-related tax affairs effectively.
Seeking professional help for filing a P85 form in the UK is not just about filling out a form correctly. It's about understanding and navigating the complex web of tax laws, maximizing your financial efficiency, ensuring compliance, and gaining peace of mind during the transition to living abroad. With the right professional guidance, you can confidently manage your tax affairs, ensuring a smooth and compliant move from the UK.
20 Most important FAQs about Form P85
1. Q: Do I need to file a P85 if I am leaving the UK temporarily?
A: Yes, if you're leaving the UK for a full tax year or more, it's advisable to file a P85, even if your absence is temporary.
2. Q: How does the P85 form affect my UK State Pension?
A: Filing a P85 does not directly affect your UK State Pension, but it helps HMRC update your tax records, which can be relevant for your pension contributions.
3. Q: Can I submit a P85 form if I’ve already left the UK?
A: Yes, you can submit a P85 form after leaving the UK. It's important to do so to settle your tax affairs.
4. Q: Is the P85 form applicable to students studying abroad?
A: Yes, if a student is leaving the UK for a full tax year or more, they should consider submitting a P85.
5. Q: What happens if I don’t submit a P85 form?
A: If you don't submit a P85, you may end up paying more tax than necessary and may face difficulties in claiming a tax refund.
6. Q: Can I file a P85 form online without a Government Gateway account?
A: No, filing the P85 form online requires a Government Gateway account. Alternatively, you can submit it by post.
7. Q: What should I do if I lose my P45 before filing a P85?
A: If you lose your P45, you should inform HMRC when you submit your P85 and provide as much employment and income information as possible.
8. Q: How long does it take for HMRC to process a P85 form?
A: The processing time can vary, but it generally takes several weeks. It can be longer during peak times or if additional information is required.
9. Q: Do I need to file a P85 if I'm self-employed?
A: Yes, if you are leaving the UK for a full tax year or more and are self-employed, you should file a P85.
10. Q: Will filing a P85 form impact my credit score in the UK?
A: Filing a P85 form does not directly impact your credit score.
11. Q: Can I claim a tax refund for previous years using a P85 form?
A: No, the P85 form is only for the tax year in which you leave the UK. For previous years, other procedures apply.
12. Q: What if I return to the UK after submitting a P85 form?
A: If you return to the UK, you should inform HMRC, as this may affect your tax status and obligations.
13. Q: How do I inform HMRC of a change of address after submitting a P85?
A: You should update your address through your Personal Tax Account or by contacting HMRC directly.
14. Q: Can I submit a P85 for a deceased relative who left the UK?
A: Yes, but it should be part of the estate’s administration process, and specific guidance from HMRC should be sought.
15. Q: Does submitting a P85 affect my eligibility for healthcare in the UK?
A: Filing a P85 does not directly affect your healthcare eligibility, but your residency status might, which is related to your tax status.
16. Q: Is it possible to amend a P85 form after submission?
A: Yes, if you need to make amendments after submitting the form, you should contact HMRC as soon as possible.
17. Q: How does the P85 form interact with double taxation agreements?
A: The P85 helps establish your tax residency, which is a key factor in applying double taxation agreements.
18. Q: What documents do I need to attach with my P85 form?
A: Typically, you need to attach your P45 form. If you don’t have it, provide a detailed explanation and any other relevant income details.
19. Q: Can I fill out a P85 form on behalf of a family member?
A: Generally, individuals should submit their own P85 forms. In exceptional cases, like incapacity, you may be able to do so with the right authority.
20. Q: If I have already paid tax in the UK, can the P85 help me get a refund?
A: Yes, if you have overpaid tax, the P85 form is used to claim a tax refund for the period you were in the UK during the tax year of your departure.
Getting Help
If you need help with this form, you can:
Follow the link to the Guidance Note: Statutory Residence Test (SRT) provided in the form.
Phone the HMRC helpline on 0300 200 3300.
If you are calling from outside the UK, phone +44 135 535 9022.
Please note that this is a general guide and the actual form may have specific sections that need to be filled out based on your personal circumstances. Always refer to the latest version of the form and the accompanying instructions provided by HMRC.