Leaving the UK: how to claim back overpaid Income Tax with form P85

Leave the UK in the middle of a tax year and there is a good chance you have overpaid Income Tax. PAYE deducts tax as though you will work all twelve months and use your whole tax-free Personal Allowance; leave in October and part of that allowance goes unused, while the tax on it has already been taken. Form P85 is how you get that money back. What follows is the procedure as set out on HMRC and GOV.UK pages.

Who can claim a tax refund with form P85?

HMRC lists three situations for a P85 claim: you lived and worked in the UK; you left the UK and may not be coming back; or you work abroad full time for at least one full tax year. The UK tax year runs from 6 April to 5 April. The form does two jobs at once — it tells HMRC you have left, and claims back tax paid on your UK employment. National Insurance, pensions and your qualifying-years record work separately.

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What do you need before you start: P45 and four answers

The key document is your P45, issued when you stop working for an employer; you need the part headed "details of employee leaving work". HMRC also asks whether you have a home in the UK, work full time outside the UK, still have salary paid in the UK, and will spend time in the UK over the next three years. Those four answers affect your residence status too, so they are not ones to guess at.

Can you claim online, or do you have to post it?

There are two routes. Online, through your HMRC account — if you do not have sign-in details you can create them as you go. Once submitted you get a reference number and can track the claim. One important limit: if you have not left the UK yet, you cannot claim online and must print and post instead.

The postal route suits anyone still in the country or unwilling to use the online service. You fill the form in on the website, but cannot save your progress — gather everything first and complete it in one sitting. Print it and post it with your P45; if you do not have one, explain why, for example because you have retired or were a UK crown servant employed abroad. The address is Pay As You Earn, HM Revenue and Customs, BX9 1AS.

How and where does HMRC send the money?

If a repayment is due, HMRC will pay you or a nominee you name. It arrives as a payable order posted to your address or your nominee's, to be paid into a bank account held in your name or theirs.

HMRC gives one warning in plain terms: it will not pay any fees to convert your repayment into another currency or to transfer it abroad. The practical conclusion, which HMRC spells out itself, is to keep your UK bank account open until the repayment arrives — otherwise currency and transfer charges will eat into it.

When do you not need a P85?

You do not fill in the form if you are already sending a Self Assessment tax return for the tax year in which you leave — you report the departure there instead. You may still need a return after leaving: HMRC lists renting out UK property, working for yourself in the UK, taxable savings interest from UK banks, and a pension outside the UK if you were UK resident in one of the five previous tax years.

Will you still be a UK tax resident?

That is decided by the Statutory Residence Test, counted in days. You are automatically resident if you spent 183 days or more in the UK in the tax year; if your only home was in the UK for 91 days in a row and you stayed in it at least 30 days of the year; or if you worked full time in the UK for any 365-day period with at least one day in the year being checked. You are usually non-resident if you spent fewer than 16 days in the UK — 46 if you had not been UK resident in the three previous tax years — or worked abroad full time, averaging at least 35 hours a week, and spent fewer than 91 days in the UK, no more than 30 of them working.

When you move, the tax year is usually split in two: a non-resident part and a resident part. This is called split-year treatment, and it means foreign income is taxed only for the time you were still living here. It does not apply if you live abroad for less than a full tax year.

What happens if you come back within five years?

Returners face the "temporary non-residence" rules. They apply if both conditions are met: you return within five years of moving abroad, and you were UK resident in at least four of the seven tax years before you left. If so, you may have to pay UK tax on certain income and gains made while non-resident. Wages and other employment income are not included. If you were away for less than a full tax year, you stayed UK resident throughout — so UK tax on foreign income applies for the whole period.