Benjamin Franklin’s famous quote — “There are two things you can be sure of in life: death and taxes” — remains true in the UK.
Anybody working in Britain must pay tax on their earnings. Rates range from 20 per cent to 40 per cent, and everyone has a tax-free threshold of £6035 a year.
If you’ve worked less than the full tax year, or have been on an emergency tax code, you may be able to get a refund. You’ll need a P45 (when you leave a job) and a P60 (at the end of the tax year), or a statement of earnings.
If you’re leaving the UK and don’t intend to work again before the end of the financial year, you can claim a rebate during the year.
If you’re self-employed, a company director or on the self-assessment system, you must submit a tax return for a refund. This can only be done once the financial year has ended.
If you are the citizen of, or domiciled in, another country, but choose to make your home in the UK, there is a particular feature of the UK tax system that works to your advantage. You can only be taxed on your earnings in the UK — earnings from investments, businesses and employment outside the UK can be exempt from UK tax, unless you remit the proceeds to the UK.
This feature makes the UK the biggest tax haven in Europe. There is a further advantage: if you’re in the UK for less than 183 days in a tax year (April 6 – April 5), you can reclaim tax paid while you were in the UK. This is of particular benefit to Commonwealth citizens who visit on a working holiday.
Reclaiming tax is a lengthy process and frequently takes up to four months, but as you probably won’t pay tax in your home country while you’re in the UK, this offers tremendous tax saving benefits to virtually all non-UK citizens working in the UK.