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Government Plans To Slash Expats’ Personal Allowance

Confused Expats Tax Allowance

An estimated 175,000 Britons who live abroad and draw rental income from property they own in the UK could see their £10,000 personal allowance slashed under new proposals from George Osborne, the Chancellor of the Exchequer. The curtailment of personal allowance will also affect retirees who draw a UK pension and who live overseas. In total, the move is said to be affecting up to 400,000 people and earn the exchequer an extra £400 million a year.

Government Plans To Slash Expats’ Personal Allowance

The Treasury’s new proposals, now released for consultation, are thought to be included in the 2015 budget for possible implementation in 2016.

In financial terms, this would mean that based on the minimum 20% rate of income tax, expat couples could be £4,000 worse off in the year (£2,000 each).

Back in March, the Chancellor had already warned of his intention to cut the rate of personal allowance for expats. The reasoning is simple – the UK personal allowance is at an all time high, worth £10,000 a year per person, and is becoming increasingly difficult for the Treasury to sustain; the plan is therefore for the UK to get in line with the less generous tax regimes of many other leading countries like the US, Canada and much of the EU member states.

A Treasury spokesperson explained the motivation behind these proposals: 'The increases the government has made to the personal allowance supports hardworking people by helping them to keep more of the money they earn and is one of the most generous in the world. At the same time, we believe that it is reasonable to consider whether non-residents who receive income from the UK are paying a fair share of tax on that income in this country. The government is seeking views on whether it would be appropriate to restrict the personal allowance to those resident in the UK, or people who have most of their economic connections in the UK, as is the case in many other countries including most of the EU.'

It is unlikely that many of the 1.2 million expat retirees would end up paying more tax overall, either because their pension is already taxed in their country of residence or because they are UK residents for tax purposes (by spending half the year in Britain). However, expats drawing a government pension (like former civil servants and NHS workers) might well be feeling the financial squeeze as government pensions are only taxable in Britain.

Although the personal allowance should remain available only to those with a “strong economic connection” to Britain, some tax experts are warning that many expats would be forced to consider severing their economic ties with Britain altogether and look for alternative property investment opportunities and pension schemes overseas, as there won’t be any real tax benefit to keep their assets locked in the UK.

One thing is for certain, expats receiving rental income in the UK should expect to pay more tax in future. One way to counteract the effects of the cut in personal allowance is to offset all possible allowable expenditure in order to minimise one’s tax liability; another is to look at double taxation treaties to prevent being taxed twice – both in the UK and overseas.

Now more than ever, expats need to seek expert financial help when completing tax returns.

TaxRefundPro specialise in tax return services to expats and UK landlords living overseas. Call 0203 137 5773 for a free confidential chat with one of our experts.

EU Temporary Migrant Workers To Lose Their Tax-Free Personal Allowance Entitlement

EU Migrant Chambermaids

On August 12, Chancellor George Osborne revealed tough new measures aimed at curbing down the influx of seasonal workers from EU countries. Up to a quarter of a million people, who live and work in the UK for less than six months of the year, should lose their entitlement to personal allowance, currently worth £10,000 a year.

EU Temporary Migrant Workers To Lose Their Tax-Free Personal Allowance Entitlement

Up to now, most temporary workers from the EU (including many labourers, agricultural workers, cleaners, catering and hospitality staff) could reclaim the tax they paid in the UK once they returned to their own country. Not anymore, as the proposed changes mean that they will now be set to pay 20% income tax on every pound they earn in Britain – in effect paying more tax than their UK counterparts. The wanted effect is to discourage seasonal migrant workers flooding the UK job market while being tax exempt, which is seen by many as an injustice to British workers who have to pay income tax all year round.

Under a raft of proposals from the Treasury, other affected groups to be stripped off their personal allowance concern British expats receiving income from rental properties they own in the UK and those receiving government pensions (please see my previous blog for more details on this).

While many observers and commentators applauded these measures, deemed to act both as a deterrent to EU immigration and a fair move towards British taxpayers, their enthusiasm strikes me as a little bit short-sighted. One thing Mr Osborne might not have fully weighed up is the potential repercussions his proposals will have on very specific UK sectors very dependent on EU migrant manpower, like the hospitality and fruit-picking industries, to name a few.

Next time the same anti-immigration pundits stay in a hotel within these shores, I wonder if they‘ll muster the courage to look in the eye of the person who serves them breakfast or cleans their room. Few Brits tend to occupy the position of bottom-rung housekeepers in hotels, actually. Seasonal foreign workers from the EU with limited grasp of English – many from Eastern Europe – make up the bulk of many British hotel staff, including most respected chains and top-notch private establishments. I wonder why that is… Is it maybe because temporary EU migrants, unlike their British counterparts, accept to work long unsociable hours and perform back-breaking chores for staggeringly low pay without complaining (or the means to complain, even)…? Or is it maybe because most Britons themselves would not sign up for the same harsh working conditions so HR departments have to resort to sourcing out staff from the migrant population and who prove easier to pick and drop at short notice? Could it also be a little-publicised (and scandalous) case of social exploitation nurtured by opportunistic businesses only too happy to profit from the cheapest labour source available…?

God help us if these measures succeed in halting temporary EU immigration to the UK. Would that mean even higher prices for hotel rooms and fruit shopping due to staff shortages or the increased cost of hiring – or poorer service…?

TaxRefundPro specialise in PAYE tax rebates for foreign and British tax payers. If you think you might be entitled to a tax rebate, call one of our experts on 0203 137 5773 for a free confidential and no-obligation assessment.

Top 10 Tax Credit Renewal Excuses Revealed

Tax Credit Excuses

Yesterday, HMRC revealed a best off compilation of excuses (some quite hilarious) used by tax credits claimants. This is a fun way to remind anyone wishing to renew their tax credits that they have until July 31 to do so, otherwise they could face losing their entitlement. According to HMRC’s own figures, “more than 5.8 million tax credits renewal packs were sent to claimants between April and June” and “more than 87 per cent of claimants renewed by the deadline” last year. For the first time, tax credits renewal can be done online at GOV.UK, making the process a lot easier for all concerned..

Top 10 Tax Credit Renewal Excuses

    In the chart of brainless excuses given by claimants to HMRC for missing the deadline, we find:
  1. I didn’t need the money because I’d met a rich bloke, but he dumped me (maybe he saw the light…)
  2. My mum usually does this for me (that’s Mum’s fault, obviously…)
  3. The form was locked in the boot of my car, and then my car caught fire (what about requesting a new pack, buster…?)
  4. My baby used the paperwork as a colouring book (nice to see official paperwork having some proper use…)
  5. My dog ate the form (times are hard, even for pets…)
  6. I got confused with the 31 January Self Assessment deadline (so you’re self employed, tell me more…)
  7. booked the last two weeks of July for a holiday and forgot all about it (renewal packs are sent from April but this fact got lost in the claimant’s mind…)
  8. I’ve been in hospital but am feeling much better now (glad to hear it…)
  9. I was unable to get income details from my employers in time (what’s the use of pay slips…?)
  10. I thought I’d already renewed it (doh!)

Original Post: Original Content Can Be Found Here

TaxRefundPro specialise in PAYE tax rebates. If you think you might have paid too much income tax and you should be due a tax rebate, call our experts for free advice and assessment on 0207 137 5773 or apply online.

Got A Second Job? Make Sure You Don’t Underpay Your Tax!

Two Jobs Underpay Tax

Ok, we all know that many people overpay their income tax and can claim a refund from HMRC. If this is your case, we can help as we are a private registered tax agent with HMRC. However, be aware that if you are employed and hold more than one job concurrently you could also run the risk of underpaying tax and end up owing money to HMRC at a later date. How is this possible? Let’s take an example.

Make Sure You Don't Underpay Your Tax!

A friend of a friend is employed full time as a cleaner in a hospital, this is his main job. To make ends meet, about eighteen months ago he took up a second job part time in a sandwich shop. To his surprise, twelve months down the line he was slapped with a bill of over £1,000 from the taxman…! Of course, this came as a shock to him as he didn’t intend to defraud anyone in the first place and he felt hard done (‘gutted’ is actually a more accurate description). He tried to argue his case with HMRC, there was nothing to be done, he had to pay up. But my friend could have taken very simple steps much earlier to avoid such a bad experience. Similarly, if you hold two (or more) jobs at the same time, you can make a few basic checks to avoid the same fate as his example is by no means an isolated incident.

So was my friend hard done by? Yes and no. The problem was that he didn’t realise that he was receiving two tax free allowances, one for each job. This wasn’t his fault, of course, and for that reason he had the right to feel upset (after all, he’s not in charge of payroll!). But by the same token he could have easily spotted the mistake from the onset.

Because HMRC applies the amount of tax free allowance only to your main job, any other employment that you hold concurrently should be taxed at 20% rate. This should be reflected in the tax code on your payslips. For this current 2014-15 tax year, in most cases (if you’re under 66 years of age and do not already have special circumstances, like an outstanding debt with HMRC or a special coding notice due to fluctuating earnings because of substantial bonuses), the correct tax code for your main employment should be 1000L.

This code means that you are entitled to earn £10,000 tax free between 6th April 2014 and 5th April 2015. If you are paid monthly, you will start being charged income tax for each pound you earn over £833 (£10,000 divided by 12 months in the year = £833). If you are paid weekly, then you will start getting charged income tax for every pound you earn over £192 (which is £10,000 divided by 52 weeks in the year).

But remember, you can only receive one tax free allowance at a time, so if you hold more than one employment, you must ensure that the tax code applied against any secondary jobs is BR, meaning that you get charged at the Basic Rate of income tax at 20% for every pound you earn. If for any reason you are given a 1000L tax code for more than one concurrent employment, there is a mistake somewhere… you may be receiving more than one tax free allowance, which is against the law (as well as being unfair for the rest of UK taxpayers).

Make no mistake, HMRC will realise it sooner or later and chase you for repayment. Even if you change addresses or move countries, they will cotton on to your situation and if they feel that you are evading the problem they may take drastic action to recover the unpaid tax. So don’t be naïve and hope that HMRC won’t notice it, they will!

The first lesson here is to CHECK YOUR PAYSLIPS to ensure that the correct tax code is applied. If in doubt, call HMRC or write to them (you can’t email them, unfortunately), explain your work history in detail (mentioning accurate start and finish dates for each job) and ask them to check that the correct tax code has been applied. You’ll normally find Mr Taxman quite helpful when you approach him voluntarily and play fair. More often than not – and depending on your circumstances and the amount in question – any debt you might have accumulated will be deducted from your future earnings (in the following tax year); HMRC will normally amend your tax code for the next tax year so your tax free allowance will be reduced accordingly, until the amount you owe is fully repaid. If at the time of repaying the debt you receive benefits (like Employment Support Allowance or Job Seekers Allowance), they may decide reduce your entitlement accordingly. If however you left the UK in the meantime, you will be requested to repay the whole amount in one lump sum.

The second important point (which wholly depends on you as it is ultimately your responsibility) is that you communicate accurate and correct information to your new employer(s) every time you start a new job. If you do take up secondary employment, tell your new employer that this is a secondary job so HMRC has all the correct information and applies the right tax code from the onset. This will greatly reduce the risk of mistakes from HMRC (because they do not hold correct employment details for you in the first place) and possible heartache in future…

TaxRefundPro specialise in tax refunds. We are a private company registered as tax agents with HMRC. If you’re unsure you paid the correct tax, call our consultants in all confidentiality for a free no obligation assessment: 0203 137 5773.

HMRC Cracks Down On Undeclared Income In The Health and Wellbeing Industry

undeclared taxes in health and wellness industry

HMRC is using its Health and Wellbeing campaign to encourage professionals in that industry to come forward. The Health and Wellbeing Tax Plan was a campaign that gave health professionals an opportunity to tell HMRC about income still undeclared and get the best possible terms by making a ‘voluntary disclosure’. By volunteering and ‘coming clean’ while there was still a chance, health workers faced lighter penalties than if caught by HMRC first…

HMRC cracks down on undeclared income in the Health and Wellbeing industry

Under the Health and Wellbeing Tax Plan, health professionals had until 6 April 2014 to disclose details and pay the tax owed. Those concerned who still haven’t come forward or simply choose to ignore the warning now risk action from HMRC’s specialist taskforce.

Dentists and doctors are not the intended target. Especially in HMRC’s eyesight are physiotherapists, occupational therapists, chiropractors, osteopaths, chiropodists, podiatrists, homeopaths, dieticians, nutritional therapists, reflexologists, acupuncturists, psychologists, speech, language and art therapists - and many others.

It would be very naïve to believe that HMRC won’t take action against tax cheats in the Health and Wellbeing industry. As well as using advanced technological tools, they are known to use information available from third parties and regulatory bodies, including bank, financial institutions and the industry’s own professional bodies, and use it to uncover payment sources yet unspoken for… HMRC’s taskforces can actually visit the selected professionals to examine their records and carry out other investigations.

The Treasury has made £1billion available to HMRC to dedicate resources and manpower in an effort to identify and track down tax evaders. As a result, since 2011, £136 million has already been recouped, with an additional £90 million a year expected from 2014-15.

HMRC’s Jennie Granger, Director General of Enforcement and Compliance, said: “Health professionals have been given every opportunity to take advantage of our quick and straightforward way of bringing their tax affairs up to date. We will now use information we hold from third parties and regulatory bodies to identify people who have not paid what they owe. Penalties – or even criminal prosecution – could follow.”

Anyone who would like to disclose unpaid tax to HMRC can still call the Campaign Voluntary Disclosure helpline on 0300 123 1077.

TaxRefundPro specialise in tax return services for the self employed. So we can help you get your tax affairs in order without you having to pay the taxman more than you should, we recommend you call our experts in strict confidence and without delay for a free no obligation assessment: 0208 137 5773.

10 Stupid Excuses For Not Paying The National Minimum Wage

Broke & Skint National Minimum Wage

I’ll always remember this Jobcentre vacancy in Plymouth for an ‘ice cream van man’ with a remuneration of only one pound an hour… Ok, this was in 1994 and it shows my age but even then, this level of pay was scandalous. The National Minimum Wage was introduced on 1 October 1999 to combat exactly that – human exploitation and poverty. The NMW now stands at £6.31 an hour for workers aged 21 and over, and is set to rise to £6.50 in October 2014.

Employees on low pay – Ensure you are getting paid the National Minimum Wage

HMRC takes the matter of NMW so seriously that they have 16 teams dedicated to tackling stingy and fraudulent employers – let’s call them what they are, exploiters! There is even a national helpline available in 100 languages, called the Pay and Works Rights Helpline on 0800 917 2368, that offers confidential advice.

Many interns who are working for nothing or for expenses-only are among some of the most vulnerable workers that HMRC is trying to reach out to, in an effort to stop this abusive practice.

    HMRC recently revealed the top ten 10 lamest excuses by shameless employers for not paying their staff the minimum wage. This makes uncomfortable reading…
  1. An employer said a woman on the premises was not entitled to NMW as she was his wife. When asked what his wife’s name was, the employer said: “Err, her name? What’s your name, love?”
  2. “My employees don’t speak English, so they’re not entitled to it.”
  3. An employee ran out of the premises when HMRC officers arrived to check for NMW infringements. The same employee then returned – minus the work pinafore – with the employer claiming they were a customer.
  4. “When the NMW goes up I do increase the amount I pay a little, even if the total pay is still below the NMW. I don’t think it’s right to ignore rises in NMW.”
  5. “I know I am paying them too little, but they are happy to work for this amount because they are getting experience.”
  6. An employer said his employee was just working for a few days, with a view to buying the business. When HMRC checked food safety records, the employee’s name was found on historic food temperature records.
  7. An employer claimed they realised they were not paying employees NMW and had just this week increased their wages…to an hourly rate which was still below the minimum wage.
  8. “It wasn’t a conscious decision to say ‘I’m not going to pay this’, but I’ve never really considered doing it because I’ve not had people come to me and say, ‘I’m not getting paid enough’ or ‘Is this the minimum wage?’”
  9. One employer claimed an employee was just a friend, and only in the restaurant as they were in the area. HMRC officers returned another day to find the employee in the kitchen preparing food.
  10. A number of employers claimed that accommodation they provided workers made up for their shortfall in wages.

In 2013, HMRC’s investigations resulted in over 26,000 people getting a share of £4 million in back pay. HMRC’s Director General of Enforcement and Compliance Jennie Granger explained, “HMRC investigate all complaints of employers failing to pay the minimum wage. We will take action to recover back pay for employees and fine employers who are not playing by the rules. HMRC officers work hard across the UK to ensure that everyone is paid at least the National Minimum Wage, and anyone who isn’t should call us.”

Full NMW rates and age groups are available on HMRC’s official website:

TaxRefundPro specialise in PAYE tax rebates. If you think you might have paid too much income tax and you should be due a tax rebate, call our experts for free advice and assessment on 0207 137 5773 or apply online.

Adbirds - Google Adwords - April Fools!

Google Adbirds April Fools!

For those of you that like April Fools Jokes and are familiar with the term "Adwords" (Googles Advertising Network) then you'll like the picture below, Googles version of April fools, forget Adwords, try Adbirds! Completely unrelated to tax, but amusing nonetheless!

Google Adwords or Adbirds
Google Adwords or Adbirds!

9 Top Tips To Claim Petrol Expenses

get your money back

A growing proportion of employees have to bear the brunt of paying for travel and business expenses out of their own pocket, with little or no funding at all from their employer – carers; IT consultants; sales managers; etc… being the most affected professions. HMRC is of course aware of this trend, which is why a basic knowledge of the rules can prove useful so you can get a sizeable tax refund for your business petrol/fuel expenses.

9 Top Tips on Claiming Back Petrol Expenses

Please note we are not talking about Mileage Expenses if you are self employed; under self assessment legitimate business expenses, including travel and subsistence, can easily be offset against tax. However, the rules are a lot stricter for employees under PAYE. To be able to claim Mileage Expenses, they MUST be:

  • Related to business-related travel only. You cannot include any travel related to personal errands or normal commuting from home to your registered place of work. Otherwise, it’s fraud!
  • Necessary for you to perform the duties of your occupation. Occasionally, HMRC may request to see the terms of your contract of employment just to ensure that you actually need to use your own vehicle or pay for your own fuel costs in order to perform your normal duties
  • Be clear from your employer that he does not reimburse you for business travel or in full. Generally, a signed declaration from your employer is sufficient to justify this. If you do receive some reimbursement, which is inferior to HMRC’s allowance rate of, you can still claim the tax relief for the difference (we’ll explain this in a moment)
  • Incurred by yourself and provable in the form of receipts or traceable from bank statements. Although you wouldn’t need to supply these to HMRC, this is just in case they want to check up on your claim at a later date – remember, this can happen several months of years after you actually received your refund.
  • Related to business travel that occurred in lapsed tax years. Under current guidelines, you can claim tax relief going back 4 tax years – from the date of this article, this means you can claim fuel expenses from 6th April 2009 (any earlier and the claim won’t be valid). However, you cannot include expenses incurred during this current tax year; you must wait until the tax year ends to submit it – from 6th April 2014

The easiest way to claim tax relief on motoring expenses, including fuel, is by using a detailed mileage log and applying the mileage rate allowance from HMRC. The log should clearly indicate the starting and destination addresses with post codes; the exact reason for the travel (i.e. “Business” is too vague; “Visiting client Mr X” is better); the exact mileage figure for the round trip. When using the mileage allowance rate, you cannot add your motoring costs as well. You either claim back the total of expenses you incurred, like petrol/diesel; insurance; repairs; etc.; factoring for the business use for the expense (i.e. 50% of my car use is for business)or you opt for claiming the mileage allowance rate, which in most cases will work out to your advantage, especially if you do a lot of business miles. This is because the rate is generous as it already takes into consideration all motoring expenses, including the cost of fuel; insurance; maintenance & repairs; vehicle depreciation; etc…

So, how do you calculate the mileage value? Simple…ish! The allowance rate from HMRC can vary one year to the next, so it’s worth checking on their website the applicable rate for the tax year(s) in question. In 2013-14, the rates for a car are 45p per mile for the first 10,000 miles in a tax year, then 25p per mile for each subsequent mile. Simply multiply the miles you’ve done per tax year to arrive to the actual expense value.

Say, for example, you made 12,000 business miles in 2013-14 and you didn’t get reimbursed from your employer. The expense value is therefore 10,000 miles x 45p + 2,000 miles x 25p = £5,000. However, the tax relief applicable to your claim – or the value of the tax refund that you could expect – is 20% of that amount, £5,000 x 20% = £1,000 in tax refund. This is assuming your actual rate of income tax is 20%. If you pay 40% income tax, then the rate of the tax relief will reflect that. Got it?

Now let’s say that your employer actually did reimburse you for some of the mileage, so how do you work out the claimable expense value? First, find out the rate used by your employer, you should easily find this out from a pay slip. Let’s assume your employer did pay you 15p per mile. Using the previous example, if the value of your expenses is £5,000 (we worked that out earlier), subtract from that figure 12,000 x 15p, which leaves £3,200. If you pay income tax at 20% rate, then the tax relief would be £3,200 x 20% = £640. This is the value of the tax refund that you should expect back from HMRC. Definitely worth it, if you ask me!

A few important points to bear in mind:

  • You need to fill in a P87 form for each tax year you to claim tax relief if the expense value of the claim is under £2,500. This form is downloadable for free from HMRC’s website
  • If the value of the expenses is £2,500 or over, you need to fill in a self assessment tax return, (or else your claim will be rejected!)
  • You can only receive in tax relief an amount which does not exceed the tax that you paid in that year. If you paid, say, £4,000 income tax in 2013-14 and the value of the tax relief is £5,000, you’ll only get £4,000 in tax refund! Remember, you’re claiming a tax rebate, which means you’re asking HMRC to reimburse you for your legitimate fuel expenses against the value of the tax that you actually paid during the same tax year
  • If for some reason you actually owed money to HMRC prior to you masking a claim i.e. (You underpaid tax in previous years; You are in arrears with tax payments from previous years; etc...) then HMRC will use the refund value against your debt. If this is your case and the value of the tax rebate is enough to cover your debt, they will repay you the difference. Otherwise, they will simply use it to reduce your debt

Claiming tax relief for fuel expenses can be quite a complex subject; not everyone knows how to fill in tax returns or P87 forms properly. This is why many employees prefer to use the services of a tax agent. Tax agents are familiar with all the processes and forms involved, as well as being a good source of advice.

If you need specialist help to Mileage Expenses, contact one of our consultants on 0203 137 5773 for a free assessment.

Wear & Tear Tax Allowance For Furnished Lettings

landlords wear and tear tax breaks

Most landlords would already be aware of the ‘Wear & tear allowance’ for furnished lettings, but many are still confused about what it covers. According to HMRC, it refers to “the provision by the owner of plant or machinery, including furniture, for use in a residential property”. Because these items do not qualify for capital allowance, a deduction may be available for a wear and tear allowance.

Wear & tear tax allowance for Landlords

From 2011/2012 onwards, the wear and tear allowance is calculated as follows – it is 10% of the “relevant rental amount”, which is the net profit from the rental income less any expenses that the owner may have paid instead of the tenant i.e. Utility bills (gas, electricity, water); Council tax (or domestic rates in Northern Ireland).

First of all, landlords must understand that the allowance is only applicable to a letting of furnished properties and excludes furnished holiday lettings or the rent a room scheme. It covers what HMRC refers to as a “dwelling house” (which means someone’s permanent place of residence, by opposition to a place where someone may holiday). For that reason, a rented caravan or houseboat may also qualify. However, it will not be available to tenants who sublet as only the first landlord in the chain is eligible to claim the allowance.

Secondly, the wear and tear allowance only applies to furnished properties. So what is a ‘furnished’ property, exactly? It is described as “one that is capable of normal occupation without the tenant having to provide their own beds, chairs, tables, sofas and other furnishings, cooker, etc.” A non exhaustive list of items covered by the wear and tear allowance includes movable furniture or furnishings (such as beds or suites); televisions; fridges and freezers; carpets and floor coverings; curtains; linen; crockery or cutlery; other furniture. Therefore, partly or unfurnished properties do not qualify for the wear and tear allowance. A property is not furnished if there is only the provision of nominal furnishings, for instance a fitted kitchen, curtains and carpets. It is also worth noting that fixtures that are an integral part of the buildings are not covered - basically any item that cannot normally be removed from the property i.e. baths; washbasins; toilets; immersion heaters; etc. However, the cost of replacing such fixtures would normally be treated as an allowable expense as a repair to the building. Full guidance is contained in forms PIM3200, PIM3205, PIM3210, PIM3215 and PIM3230, all obtainable from HMRC’s website.

TaxRefundPro specialise in tax return services for landlords. Contact us via our website or ring 0203 1375773 for a free no obligation quote.

Tidying Up Your Tax Affairs When Leaving The UK

get your money back

Emigrating is a truly life-changing event, with so many important things to plan ahead. Most people who are serious about emigrating will carefully prepare their new life ‘down under’ in order to muster any chance of success. So you’ve sorted out your visa and a place to stay? Good. And you secured that new job too? Excellent. Packing & moving arrangements all done? Splendid!

Don't Leave Your Rebate Behind When Leaving UK

Yet, many UK migrants overlook their ongoing responsibilities as UK tax payers – or worse, some choose to simply ignore them. Tidying up your tax affairs with HMRC when you emigrate doesn’t sound like fun but it is a necessary chore if you want to avoid Mr Taxman rearing his ugly head and causing you unnecessary headaches in future. And no, he will not let go if any tax liability remains unpaid or if you fail to submit a tax return, regardless of how far away you are from Britain.

In other cases, many migrants unknowingly leave some of their hard-earned in the hands of the taxman because of a simple lack of understanding of their rights! So what should you do in order to tidy up any loose ends regarding tax?

First of all, contact HMRC before you leave. Doing it from a different time zone is not an ideal scenario. They do not accept email communication so ring them or write to them. Tell them your exact leaving date & your new overseas address.

If you are employed – and this is a really interesting part! – you may be able to claim back any unused portion of your personal allowance in the form of a tax rebate. You can do this yourself by completing a P85 form ‘Leaving the UK – Getting your tax right’ (that is if you are confident in what you’re doing and are ready to invest time chasing it up!). The form is downloadable for free from HMRC’s website. Alternatively, you may prefer to hire the services of a tax refund company to complete the paperwork and chase your tax rebate for you. Whichever you choose, the point is it’s much easier if you start proceedings before you leave.

Secondly, don’t ignore letters and notices from HMRC. HMRC automatically sends reminders to self employed tax payers about completing a self assessment tax return. The same applies if you already told HMRC that you will be receiving income from renting out a property (or several) in the UK. HMRC will send these reminders to your last known address so it’s important that you update HMRC with your new address overseas. You must comply with these requests to submit a tax return within the stipulated deadline otherwise you could incur severe financial penalties, worth up to £1,600 per tax year – even if your tax liability ends up being nil, the penalties will still stand and need to be paid in full. Unfortunately, HMRC will not accept ‘I didn’t know anything about it’; ‘I just forgot’ or ‘I was too busy’ as a valid excuse. Being careless won’t cut it with Mr Taxman.

Another classic oversight – Tell your pension provider your new overseas address so they can send you yearly statements. These could become crucial information that HMRC may request at a later date (sometimes way in the future) so you want to ensure you have them with you. Again, chasing up pension statements from the Antipodes ten or twenty years down the line could prove a stressful exercise (especially if in the meantime the provider merged with another company or simply went bust and you never got the letters telling you all about it ).

Here are other useful tips and information:

What is the personal allowance?

Under PAYE (the ‘Pay As You Earn’ tax system for employees, designed to deduct income tax at source) tax payers are entitled to receive a personal allowance. It is the tax free amount that anyone in the UK is entitled to earn without having to pay any income tax, within a tax year. The rate of personal allowance changes nearly every year and is decided by the Chancellor of the Exchequer.

What is a tax rebate?

According to HMRC’s own statistics, 1 in 3 tax payers are due a tax refund, with an estimated £322 million remaining unclaimed every year. Under current guidelines, tax refunds (also known as tax rebates) can only go back as far as the last four tax years, so time is of the essence. Do not put off a claim as your entitlement reduces as time passes. The four-year rule means that you can currently claim any income tax that you’ve overpaid going back as far as April 6, 2009. But from 6th April 2014, you will only be able to claim back as far as April 6, 2010. This means that if you did overpay income tax prior to April 2010, you will not be able to claim it back as it would go over the four-year rule.

What is a tax agent?

A Tax agent is a person or a company registered with HMRC and authorised to look after a third party’s tax affairs (be it an individual’s or a company’s). Tax agents include accountants and tax refund companies. Tax agents can only look after someone’s tax affairs if the tax payer gave them express authority to do so by completing the form 64-8 ‘Authorising your agent’.

What are tax refund companies?

They are private firms who specialise in obtaining tax rebates from HMRC. Traditionally, tax refund companies lodge a claim with HMRC, chase it up and obtain the refund on behalf of their clients in exchange of a small commission fee. It is an industry standard that a fee is only applied once the refund is actually received from HMRC. Most companies operate a ‘No refund, No fee’ policy, which means that you won’t be charged for submitting a claim on your behalf if it turns out you are not due a refund. The fee is usually a percentage of the refund value itself. It is also often paired with a ‘minimum fee’ or ‘administration fee’, which is a chargeable flat amount.

How to select a reputable tax agent?

In most cases you can really save yourself considerable amounts of time and inconvenience by hiring the services of a reputable tax agent. It is a very competitive market so it pays to shop around. Trust your instincts before giving over the authority to deal with your personal tax affairs to anyone.

Although they should definitely be registered with HMRC as tax agents (like any accountancy firm), tax refund companies should not advertise themselves as being ‘’endorsed’’ or ‘’affiliated’’ or ‘’recognised’’ by HMRC or the UK government, or even infer that they are. The reason is that HMRC does not endorse private companies as a rule. A disclaimer should clearly be displayed on a tax refund company’s website informing visitors of that fact. If there is no disclaimer, just give them a wide berth as they are in clear breach of the law… and who wants to trust their money with a company displaying poor ethics?

Their website should also include clear and easy-to-understand information about the actual fees and services on offer – if the information regarding what they charge is missing or ‘fuzzy’, query it before committing to anything.

Some providers claim that they abide by some sort of professional body’s code of conduct. The truth is that HMRC does not endorse or recognise any of these self-professed watchdogs. Again, do not be fooled as this is just ‘marketing’.

The ‘average claim value’ is another common lure. Many providers state an average claim value i.e. “Our average claim value is over £1,600’’. In reality that figure is very likely to be unverified or sometimes pure fabrication. Any alleged ‘average claim value’ should by no means be interpreted as an indication of how much your own claim is likely to be worth. It is simply a marketing trick designed to attract gullible would-be claimants. No-one can say for certain if you are eligible for a tax refund or not – let alone estimate any refund value – without first examining any documentation regarding your pay and tax details i.e. Employment history; P45; P60; P11D; etc… Everyone’s situation being different, your claim can only be judged on its own merit. As the saying goes, if a statement or an offer sounds too good to be true, then it probably is.