UK Tax System for Overseas Worker
If you have decided to go to the UK to work for a while and you have no idea about tax issues that are related to countries different from yours. There are some things you should know.
We argue that the most important thing is to know what taxes are paid and which documents can be important during your period of work in Great Britain.
In this post, we will talk about the UK tax system, how to make the annual tax return, what taxes can be returned to you in the UK and what are the most important working documents.
The British Tax System
Taxes that are deducted from a worker’s salary in the UK are PAYE and NI. To be able to collect this salary, the most desirable thing is to open a bank account in England.
Pay As You Earn is what we know in France as income tax . In our article on how to calculate your salary in the UK, you have an example to better understand it. In summary, this means that you will not pay taxes for the first £ 11,500 a year you earn. Beyond this level, a percentage is deducted according to the money you earn annually and becomes a part of taxes.
Because of the PAYE you must also take into account that you will not pay more taxes if you have a double job as you would in France. Here, we repeat, you pay taxes based on what you earned that year. You may find yourself in the situation where you will pay more taxes in the beginning when different companies do not know if you have other jobs. But do not worry, you can ask to be reimbursed and they will return it to you.
| Annual profit | Tax rate | |
| Personal Allowance | up to £ 11,500 | 0% |
| Basic Rate | From £ 11.501 to £ 45,000 | 20% |
| Higher Rate | From £ 45.001 to £ 150,000 | 40% |
| Additional Rate | More than £ 150,000 | 45% |
On the other hand, the NI or Nat.Ins is what is called in France the Social Security . It’s the National Insurance Number we talked about in the introduction. In the salary post, you will also find another example so that you can fully understand these taxes. Most people belong to category A regarding the payment of these taxes.
Finally, we find the taxes known as the Tax Code . It is, literally, the tax code. It is used in reference to PAYE, it tells you how much you can charge without having to pay this percentage. It is represented by a number (resulting from your personal allowance divided by 10) accompanied by a letter that can be L or T.
If you do not have a personal allowance , such as company cars, telephones or any other type of assistance, the Tax Code starts at the minimum established for the fiscal year. During the period 2017-2018, it amounts to £ 11,500 , then in this case, it would be represented by 1150L .
Taxes in the United Kingdom
To work (and pay taxes and have access to health care), you will need to register for the National Insurance Number , called NIN. Without him, you will not be able to work.
If you are over 183 days old in England, you must declare your taxes . The fiscal year usually begins and ends in April of each year and the British tax is called HMRC (Her Majesty ‘s Revenue and Customs).
As for claims , you can claim a refund of taxes paid for up to 5 fiscal years. On the other hand, thanks to the agreement that the United Kingdom has with France , you can claim if you paid more taxes on your return.
If you are going to work in the United Kingdom, you may be interested in currency changes between euros and pounds and how to export your unemployment in France.
United Kingdom Tax Return
At first, you will have nothing to do about it. Normally, they tell you what taxes you have to pay or not. But hey, you can know the data they have about you and even change it on the government website.
If you do not really like computers, you can contact them directly by phone (0300 200 3300). Have your NIN and the P45 or P60 documents handy. They will welcome you every day: Monday to Friday from 8h to 20h, Saturday from 8h to 16h and Sunday from 9h to 17h.
The last option is to contact them by mail :
Pay As You Earn and Self-Assessment – HM Revenue and Customs,
BX9 1AS, United Kingdom.
HMRC Taxes On the one hand, it must be said that you do not really make your statement as it is. What is done here is Income Tax . What they do is withhold taxes directly based on your Tax Code , which is allocated by the HMRC along with the information of your salary provided by your company.
In the event that you receive additional benefits or income, you will need to do what is called Self Assertion . In the event that you make and owe money, you can choose to pay it directly or change your Tax Code to pay it monthly . If, on the other hand, you have paid too much, you will receive the corresponding money in the form of a check .
In case you want to make sure that the tax code that appears on your payroll is correct, you can call the HMRC to check it. You can also do it online .
One thing to keep in mind is that the first year of work in the UK the taxes you pay are lower. This means that your tax allowance (taxes that you pay according to age, income …) is higher. It is also a good idea to hire a tax accountant.
Refund of UK Taxes
Keep in mind that they will not give back anything for the one and only fact that you are returning to your home country . Rates will be returned only if applicable. To make it clear to you, it is worthwhile to consult the article on salary in the United Kingdom .
Once the fiscal year is over, the HMRC calculates what you have paid between the time you started work and at the end of this exercise , it will divide it between the months of work and it is the money that will be back for you. At least, that’s the estimate they make.
This money will be included in your payslip of the following year , you will see it with the concept of the words income tax . Note: If you are applying for social assistance, benefits , you can not claim a refund , although there are exceptions.
Here are the possibilities for which you can get a tax refund :
You work and they charged you too high taxes on your salary.
The method of claim depends on the fiscal year in which you paid the most. The fiscal year begins on April 6 and ends on April 5 of the following year.
You have stopped working.
If you receive unemployment benefits, a subsidy, employment support, a carer’s allowance or a disability benefit of more than 28 weeks, you will not be able to get a refund.
In case they have to return money , they will do it at the end of the exercise or when you start a new job .
You made a tax return and paid too much.
This may be due to the fact that you have changed your tax refund after submitting it, that you have entered the wrong amount when paying the Self Assessment or that you are no longer self-employed and that you receive payments.
In case you have made your return online , you must enter your HMRC account, go to Business tax account, and then to Self Assessment Details and Options . Here you should go to more options and click on Request a Repayment .
HMRC Statement In the case where you have done it on paper, you should receive the refund in the bank account you have entered . If you have not done so, you should contact the HMRC and explain why you think you paid too much.
In the case where you do so in writing, you must include the Unique Taxpayer Reference (UTR) found in the previous statements as well as the bank details of the UK account.
You receive a pension
If you have a private pension, the provider will reimburse you directly what is due to you . If it does not do so, the HMRC will publish a calculation of the P800 tax online (normally at the end of September). You will be told if you can claim online or directly, they will send you a check in less than 14 days.
If you have retired and are receiving a state pension, you must complete Form P50 .
You bought a life annuity
A life annuity is a guaranteed income for life that you buy from an insurer in exchange for a lump sum. You usually pay a tax automatically at a rate of 20% . But if you do not need to pay income tax because you do not earn more than the personal minimum, you can claim the excess or get a refund.
To recover the taxes, you will need the R40 form and to get the refund, fill out the R89 form .
You used your own money for your work.
You paid interest on savings with low income.
If you live in one country and you have income from another country.
If they have to return it to you with a check , it will usually be sent within 5 weeks . In case it does not arrive, you will have to wait 5 weeks after applying online and 6 weeks after you have done it by mail. Then you can get in touch with HMRC .
In the event that you get it directly into your bank account , you should receive payment within 5 business days , but it can take up to 25 days if the refund is for tax levied on the land or pension and you do not have a P800 tax calculation.
Work with an Emergency Code
In this case, what you have to do is to regularize your situation . This is ideal if you want to stop having problems. If it is not possible to do this before the end of the fiscal year, the only thing that will concern you is to return the completed P800 form that the HMRC will send you . In this case, they will send you a check with the tax money that should be returned to you.
If you do not work
In this case, two different scenarios are posed: that it has been a good time or that you are unemployed for 4 weeks or less.
You have not worked for a long time
Of course, if you stay unemployed, you will not have to pay anything and you will not have to ask for a refund . However, if you have been in your new business for less than four weeks, it must pay the taxes . That is, the HMRC must not be warned of anything.
In order for your new employer to reimburse you for taxes, you must take Parts 2 and 3 of Form P45 . With that, it should be enough. Part 1 is for you.
It’s been 4 weeks since you did not work
If you know that you are going to be at least four weeks unemployed since your last job and you are not going to ask for benefits , you will have to ask the HMRC . You must send two forms in the mail: the P50 form, called the clamming tax back , and the P45 part 1A.
