Many broad statements are usually untrue when it comes to taxes. Because we are committed to offering the best tax information, in the most accessible way, here's a quickfire fact check on 9 common UK tax refund myths!
Myth no. 1: Applying for a tax refund means I can’t stay in the UK
Don't worry, nothing could be further from the truth! A UK tax refund can be claimed by anyone who has worked and paid taxes. As long as you are following all the rules, it bears no relevance to your right to stay and work in the UK!
Myth no. 2: You won’t be fined for filing a tax return late if you don’t owe any tax
Unfortunately, if you are required to file a tax return and you miss the deadline, - which is October 31st for paper returns and January 31st for online submissions - you will be penalised with a £100 fine, even if you don't owe any tax!
You can learn more here about how to avoid UK tax penalties!
Myth no. 3: Everyone that leaves the UK to live abroad is entitled to tax back
This will depend on how much Income Tax you have paid during your time in the UK. For example, if you haven't worked or paid taxes at all, you won't be eligible to get a tax refund.
Your residency status can, however, affect how much Income Tax you pay in the future. Reach out to HMRC if you have questions regarding yours!
Myth no. 4: If you miss the deadline because of events outside your control, you will still be fined
Fortunately, this is not true! You can appeal against some penalties if you have a reasonable excuse, like if:
- Your partner or another close relative died shortly before the tax return or payment deadline;
- You had an unexpected stay in hospital that prevented you from dealing with your tax affairs;
- You had a serious or life-threatening illness;
- Your computer or software failed just before or while you were preparing your online return;
- You faced service issues with HMRC online services;
- A fire, flood or theft prevented you from completing your tax return;
- There was a postal delay that you could not have predicted;
- There were delays related to a disability you have.
Myth no. 5: I won’t be able to get my pension if I get a tax refund
Your pension has nothing to do with claiming a tax refund! Your National Insurance contributions determine your state pension amount. You will get a tax refund if, for some reason, you overpaid taxes, which can sometimes happen.
Myth no. 6: I get all the tax I paid in the UK back when I leave
You can only claim back all the taxes you have paid if you earn less than the Personal Allowance (which is £12,570 for 2022).
Once you earn over this threshold, you can only reclaim a percentage of the tax you have paid. This will depend, on your employment specificities.
Myth no. 7: I have to leave the UK before I can claim my UK tax refund
Claiming a tax refund has nothing to do with where you live, which means you can submit a tax refund for the tax year in which you are leaving the UK as soon as you have stopped working in the country.
Myth no. 8: Only the self-employed have to complete a Self Assessment tax return
One more that is not true! You will need to complete a Self Assessment tax return in the following scenarios:
- If you've earned £2,500 or more in untaxed income (for example, if you rent out a property);
- If you've earned £10,000 or more from savings, investments or dividends;
- If you or your partner’s income was over £50,000 and one of you claimed Child Benefit;
- If you need to pay Capital Gains Tax on profits from selling shares, a second home or other chargeable assets;
- If you want to claim tax back on donations to charity, work expenses over £2,500 or private pension contributions.
If you don't know if you need to complete a self-assessment tax return, check it out here!
Myth no. 9: You only have to complete a Self Assessment tax return if you owe tax
Completely false! Even if your income is below the threshold for Income Tax and National Insurance, you may still need to submit a Self Assessment tax return. If you don't know if you need to file one, contact HMRC to make sure.
We are not sure where these 9 UK tax refund myths started, but truly hope this fact checker has helped answer some of your doubts!
If you need help claiming your tax refund,
we can help you to get it back!