UK Tax Myths Finally Debunked: Facts to Clarify Your Understanding

At Taxback we value our customers’ opinion. Many have shared their concerns with us that applying for a tax refund could interfere with their benefits and even lead to unwanted problems in the future. We have noticed that there are some very common tax myths and rumors among non-UK residents that bother them and stop them from applying for a refund.

To help you understand the UK Tax system better, we have revealed some of the most common tax myths we have met in our experience.

If I claim income tax refund, I will not be eligible for a pension.

Wrong!

If you have paid national insurance related to your pension, you will be able to receive a pension. Even if you claim tax back, you are still able to live and work in the UK and it does not affect your eligibility for a pension.

Applying for a refund will affect my stay in the UK.

Wrong!

Applying for a tax refund will not in any way affect your stay in the UK. In some cases, for example if you are working as self-employed or you have additional income, like rental or investment income, you may even be obliged to file a tax return. By filing a tax return, you are making sure that you are compliant with the UK tax laws, as in some cases you may have underpaid taxes. (See “Who needs to file a Tax Return?” to check if you are obliged to file.)

I can’t apply for a refund until I leave the UK.

Wrong!

Applying for a tax refund as a non-resident is not related to your intention to leave or stay in the country. You can apply while you are in the UK and even if you are still working! If you have worked in the UK at any time during the previous four years you can apply for a tax refund, no matter what your current employment status is or where you are living now. Neither your previous nor your current employers will be affected by your tax refund as it is paid to you by the government, not by the employer.

I can claim all the tax I paid back when I leave the UK.

It depends!

If you have earned less than the tax free allowance then you can claim back all of your tax. If you have earned more than the allowance, you will be able to claim a portion back. The amount will depend on how much you have earned and how much you have paid in tax. If you have worked and been resident in the UK and have left to live somewhere else during the last five tax years, you may be able to claim back some (only the overpaid amount) of the tax you have paid and on rare occasions, all of the income tax paid.

Everyone is due a refund when leaving the country.

Wrong!

  If you have worked in the UK and paid tax at any point in the last 5 years then you are eligible to claim a tax refund from the government. However, if you have never worked or paid tax, you will not be eligible to receive a tax refund.

If you're one of the many who has lost out on a UK tax refund due to a false myth, then don't delay. Contact us today for your free tax refund calculation, chat to one of our advisors online, or register for a call-back - you may be surprised by the amount of unclaimed money belonging to you that is sitting in a tax office bank account!