One in three people who pay tax in the UK are entitled to a tax refund. If you’ve been working in the UK, you may be entitled to claim a UK tax rebate. In fact, the average refund due is a whopping £963! That's why we're super excited to have partnered exclusively with Taxback.com to help you get that money back in your pocket, where it belongs.
Taxback.com offer free tax refund estimates, as well as a "no refund, no fee" guarantee - meaning if you're not due a refund, you don't pay anything at all!
This page will run you through everything you need to know about the tax process in the United Kingdom - and at any time, you can punch your information in the easy to use UK tax refund calculator, and Taxback.com will start their no obligation assessment process with you. What could be easier than that!
How to file your tax return and claim your tax refund:
When you first arrive in the UK, it’s likely you’ll have a lot on your mind. After all, you’ll probably be keen to secure a place to live and a job as soon as you can. Plus – you’ll always want to find the time to see all the sights. Big Ben doesn’t photograph himself, you know! Meanwhile the British tax system will no doubt be the last thing on your mind. But it’s important to get a solid handle on your tax requirements when you arrive in the UK – this can save you a lot of stress and money in the long run. With that in mind, Mark Corcoran, Head of Content at Taxback.com is here to answer the most important questions on the topic and help you to save some money on your UK tax bill. Take it away, Mark!
First thing’s first – can you tell us a little about the UK tax system?
The UK tax year is a little unusual in that it doesn’t follow a traditional calendar. Instead, it starts on 6 April and ends on 5 April of the following year. This is important to keep in mind as you can only apply for your UK tax refund at the end of the tax year – we’ll come back to this later! If you work in the UK for an employer, it’s likely you will pay tax through the PAYE (Pay As You Earn) system. Your employer uses the PAYE system to withhold income tax and national insurance contributions from your wages each time you are paid.
I have just arrived in the UK. Do I need to do anything before I start working?
Yes. You’ll need to get a National Insurance Number (NIN) if you don’t have one already. This is a unique tracker HMRC uses to monitor your PAYE and National Insurance Contributions (NIC). You can get your NIN directly from HRMC.
Am I resident or non-resident in the UK? And does it really matter?
It’s important to determine your UK tax residency status as this can have a big baring of how much tax you will have to pay. For example, UK residents for tax purposes normally pay tax on their worldwide income as well as what they earn domestically. However if you are considered a non-resident, you will only have to pay tax on income you earn in the UK – this can include:
- Money you earn from employment or self-employment
- Benefits you get from your job
- Bank account interest
- Investment profits and dividends
- Rental income
- Most pensions
Typically you will be considered a resident for tax purposes, if you spend 183 days or more in the UK in a tax year. However, each of the below factors can also affect your resident status:
- Whether your home is in the UK or not
- If you work in the UK or abroad
- If you have family and other ties in the UK
- How long you spend in the UK
- Whether you've been resident in the UK in previous tax years
How much tax will I pay in the UK?
Exactly how much tax you will pay will depend on the amount of income you earn and your personal circumstances. The first thing to consider is the Personal Allowance. This is the amount of income you can earn before you have to pay tax in the UK. The basic Personal Allowance for the 2020/21 tax year is £12,500. Your Personal Allowance may be larger if you claim Marriage Allowance or Blind Person's Allowance and smaller if your income is over £100,000. You will have to pay tax on any income you earn over your Personal Allowance.
The tax rates for the 2020/21 tax year are detailed below:
Up to £12,500
£12,501 to £50,000
£50,001 to £150,000
If you are employed you will also play Class 1 National Insurance contributions. If you earn between £183.01 - £962 per week, you will pay 12% in National Insurance. Meanwhile, if you earn over £962 a week, you will pay an additional 2%.
Can I claim any tax reliefs in the UK?
Yes! There are lots of different types of tax relief which can be used to reduce your tax bill. Here are some of the most common types of tax relief which you may be entitled to claim:
Flat rate expenses
Depending on the type of job you work in, you may be able to claim a flat rate expense. You can claim tax relief on flat rate expenses if you’re employed by someone and you:
- clean your work uniform
- spend your own money on repairing or replacing equipment you need to do your job
The amount you can claim depends on your job and the industry you work in. For example, agricultural workers are entitled to claim £100 while pilots can claim £1,022! Be sure to check how much you are due.
Working from home
A lot of people are working from home these days, right? Well, if you work from home in the UK on a regular basis, then you may be able to claim tax relief on some of the bills you pay – so long as the costs are directly related to your work. Examples of eligible expenses include - business telephone calls and the extra cost of gas and electricity. It’s important to note that you can’t claim for things that have both a private and business use, for example, rent or broadband access.
If you need to travel on business to a place that is not your ordinary workplace, you may be entitled to claim tax relief. This can include:
- Public transport costs
- Hotel accommodation if you have to stay overnight
- Food and drink
- Congestion charges and tolls
- And more...
You can potentially save on your tax bill if you are married in the UK. Through Marriage Allowance, you can transfer £1,250 of your Personal Allowance to your husband, wife or civil partner if they earn more than you. This reduces their tax by up to £250 in the tax year (6 April to 5 April of the next year). To benefit as a couple, one spouse must have an income of below £12,500 and the other’s income must be between £12,501 and £50,000 (or £43,430 if in Scotland).
Can I really claim a tax refund at the end of the year?
Yes! There is always a good chance that you will be due a refund so it makes a lot of sense to check. In fact, 1 in 3 people who pay tax in the UK are entitled to a tax rebate. On top of this, the average UK tax refund a Taxback.com customer claims is £963! Do you really want to leave all that money with the taxman? Of course not!
There are many reasons why you may be due tax back from the UK, including:
- You had too much tax taken from your pay
- You are entitled to tax relief – like flat rate expenses or marriage allowance
- You have stopped working
- And lots more!
Thousands of workers in the UK miss out on claiming their refund – unaware that they were owed money. Don’t let this happen to you!
You can claim your tax refund, either at the end of the tax year (April 6) or when you have finished working and won’t be working again in that financial year. You can apply for your refund directly with HRMC. Alternatively, if you would like someone else to take care of the paperwork for you, why not apply with Taxback.com?
I’m self-employed. What do I need to know about UK tax?
Self-employed individuals pay tax at the same rate as people who are employed through the PAYE system.
You will be entitled to claim the £12,500 tax-free personal amount and for every pound you earn from £12,501 - £50,000, you will have to pay 20% in tax. A higher rate of 40% tax applies from £50,001 - £150,000 and an additional rate of 45% applies for amounts over £150,000.
The good news is that you may be entitled to deduct some of your business expenses to reduce your overall tax liability, including:
Office costs -- rent, stationery, mobile, internet, electricity, insurance expenses and more.
Travel costs -- if you travel for your business you may be able to claim: vehicle insurance, repairs and servicing, fuel, parking and more.
Clothing expenses -- you can claim expenses for uniforms, protective clothing needed for your work.
Staff costs -- employee and staff salaries, bonuses, pensions, benefits, agency fees and more.
Legal and financial costs -- accountant, solicitor, surveyor, architect, or any other professional costs you paid for.
Training costs -- If you take part in training that helps you improve the skills and knowledge you use in your business, you can claim this as an expense.
What documents will I need when filing my self-employed tax return?
When you sit down to file your end of year tax return, be sure to have the below documents close at hand:
- mileage records
- bank statements
- receipts for purchases and other business expenses
Keep these documents in a safe place for at least 6 years as you will need them if the HRMC requests to review your tax record. And remember, it’s very important to file your tax return before the 31 January (online) deadline.
Who can help me with my UK tax?
Easy – Taxback.com! If you are a PAYE worker, their tax team will ensure you claim every relief you’re due and transfer your maximum refund straight to your bank account.
And the best part?
Their service is no refund, no fee!
So it can’t hurt to check how much you’re owed! To get started, all you need to do is complete the short form here or use their tax calculator to get an approximate tax refund quote.
Meanwhile, if you’re a self-employed worker in the UK, Taxback.com will help you file your tax return and claim every tax relief you’re entitled to – minimising your tax bill. You can find out more about our UK self-assessed tax service here.