Tax Refunds in the UK – for Expats ….everyone can get one!!!

When you get a job in the UK, there are many different ways of working, but still by far the most popular way is to just be an ‘employee’. Income Tax and National Insurance Contributions are deducted by your employer under the system of PAYE – Pay-as-you-Earn.

However, while this system is pretty good – it is NOT perfect by any means and in fact most people are in fact due a tax refund. It might only be £150 but it might be £1,500 – it is always worth trying to find out how much you are due back.

When you start work with anyone, you get a Tax Code that you will see every time that you are paid – whether weekly or monthly. You can see this on any payslip that you receive.

The thing to remember is that the Personal Allowance for individuals who are either resident in the UK or who are a member of the Commonwealth is £11,000 per annum. Now, this £11,000 is given to you as an employee over the course of the year.

The £11,000 is given to you via a system of ‘tax codes’ – and there are all sorts of different tax codes that you can get but there are 4 main ones;

1. Cumulative Tax Code 110L
This indicates that you are getting the full £11,000 per year
2. Month 1 Tax Code 110 M1
This indicates that you are getting 1/12 of the £11,000 in every Month that you work
3. Emergency Tax Code BR
This stands for Basic Rate and means that you are receiving NO Personal Allowance from this employment are paying the Basic Rate of tax on all earnings – currently 20% – and are paying 20% (the basic rate) on all earnings.
4. Company Benefits Code K code
If you are receiving benefits from any employer (called “Benefits-in-Kind) then when these benefits exceed the personal allowance, then you will be allocated a K code.

Things to remember:

a) Each job will only give you ONE tax code – normally one of the 4 above
b) Getting on the right tax code will NOT tell you whether or not you are due a tax rebate – or how much.

When are you due a tax rebate?

1. When you don’t work for a full year.
2. In the year in which you arrive
3. In the year in which you leave
4. If there are gaps in your employment history
5. If you have been taxed incorrectly on the wrong tax code.

The normal situation is that if you go to the UK then in the year in which you arrive in the UK – then you are due a tax rebate, and the year in which you leave – you are due another tax rebate. In what is often the ‘middle’ year, where you work all year – then you will not be due a tax rebate.

How can I find out? It is a relatively simple process to find out whether you are in fact due a tax rebate – and there are a number of places that will do this for you. However – everyone is going to need to know some basic information about you as an individual, and your work history while in the UK, and the appropriate Form P60s (end of year Group Certificates) and P45s every time you leave an employment. Something from every employment in the UK is a bare minimum.

There are a number of hoops to jump through to get there but if you think that this may apply – then please do e-mail in the first instance at [email protected] and we will do our best to help – remember – it costs nothing to find out.

For more information and advise please contact: [email protected]