Getting a UK tax refund and doing your UK tax return
- Should I do a UK tax return?
- I am self-employed or I have a limited company – do I have to do a tax return?
- How do I know if I am paying emergency tax?
- I think I have paid too much tax — what should I do?
- What are the advantages/disadvantages of using a tax agent?
- When can I apply for a UK tax refund?
“I realised I was paying more tax than my colleagues so I assumed I would be due a refund. I sent my documents to Inland Revenue and about three months later, I got back £420” - Alex, from Newcastle, Australia, currently living in London.
Should I do a UK tax return?
Most employees in the UK do not get a tax return to fill in and have their income tax deducted by their employers through the PAYE system. If you have earned less that £5,225 in the 2007/08 tax year tax year (£100.00 per week or £435.00 per month), or £5,435 in the 08/09 tax year, worked for only part of the tax year, were paying emergency tax and NI contribution at any stage, or if you have worked for more than one employer at any one time, you may be entitled to a tax refund.
The UK tax year begins on 5th April. If you have earned less than £5,225 in the 2007/2008 or £5,435 in the 08/09 tax year, tax year then you do not have to pay tax and can claim a refund of any overpayments.
Case study 1: You arrived in the UK in January and you secure a temp contract with an agency for one month in February. You organise your National Insurance number and then start the contract, getting paid £300 per week, earning a total of £1,200, which is taxed at the normal rate since you have your NI number. You then go travelling for two months over March and April, returning to the UK to work again in May (which is the new tax year). Since your income is below the threshold of £5,225 for the 07/08 tax year, you can claim back all the tax you have paid.
Case study 2: You arrive in the UK and immediately find yourself a full-time job. Your first pay packet comes before you have had the chance to sort out your National Insurance number, and you are therefore charged at an emergency tax rate. You will be eligible to claim back all the extra amounts you have paid at the end of the tax year on 5 April.
I am self-employed or I have a limited company – do I have to do a UK tax return?
If you are self-employed or working as a contractor, you will also have to do a tax return. See information on limited companies. If you are self-employed and not working through a limited company, you should have registered as Self Employed with the HMRC and you will have to complete a Self-Assessment tax return. See the HMRC website for more information about registering as self-employed.
How do I know if I am paying emergency tax?
If you have not supplied your employer with your National Insurance number, you will be paying emergency tax rates. Talk to the HR or Payroll department of the company or agency you are working for, or look at your payslips if you are unsure. If you are paying emergency tax your payslip should display the emergency tax code which is 522L.
You can also do the math yourself. Check out the percentages of tax you should be paying – How much tax do I need to pay in the UK?
I think I have paid too much tax – what should I do?
You need to make sure you have kept all the documents required to show how much tax you have paid. Make sure you keep the following:
- P45 a form containing details about your pay and tax, given to you if you leave you job during a tax year.
- P60 a form containing details about your pay and tax that your employer should give you by 31 May after the end of the tax year (if you were in your job at 5 April).
You then need to decide if you want to claim your tax yourself or use a traveller or tax-service company to manage the refund for you (see What are the advantages of using a tax agent? Link below). If you choose to do your refund yourself, you need to complete a tax return and submit your original P45/P60 to Inland Revenue. A tax return form can be obtained from your tax office or from the HMRC website.
Generally if you do your tax return yourself, it will take two to three months to get your money back.
For an alternative to a DIY tax return, read about the tax refund service offered by 1st Contact.
What are the advantages/disadvantages of using a tax agent?
Many tax agents and traveller companies offer tax rebate services especially for working holidaymakers. There are dozens of companies around, especially in London, so if you decide to use an agent then you should definitely shop around. If you use a tax agent, the process of getting your refund should be simpler for you and you are likely to get your money quicker. Some agencies will charge you a flat fee for their services, some will take a percentage of your rebate and some will have a ‘No rebate, No fee’ policy.
Read about the tax services offered by 1st Contact
When can I apply for a UK tax refund?
You can apply for a tax refund at the end of the financial year (5 April) or if you are definitely not going to be working in the UK for the rest of the financial year, or you are leaving the UK to return home, then you can apply at any time. If you are leaving the UK, you need to fill in a P85 form.
You can claim back tax refunds as far as six years.
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