Leaving the UK: Tax, P85 and What to Do Before You Go

If you leave the UK part-way through a tax year, you have almost certainly overpaid Income Tax, because PAYE spreads your £12,570 Personal Allowance evenly across twelve months and you will not be there to use the rest of it. The main route to the money is form P85 ("Get your Income Tax right if you're leaving the UK"), unless you already file a Self Assessment return, in which case you claim on the return instead. Everything else — pensions, ISAs, renting out your home, the State Pension and keeping your non-resident status — follows from the same question: from what date does HMRC treat you as having left?

Key points

• A mid-year departure normally triggers a refund because unused Personal Allowance is set against the pay you did receive.
• Use P85 if you are employed or unemployed and outside Self Assessment; use the residence pages of a tax return if you are already in the system.
• National Insurance is worked out pay period by pay period, so it is not refunded.
• You can keep an ISA but cannot pay into it once you stop being UK resident; UK rental income stays taxable in the UK whatever your residence.
• Staying non-resident is a day-counting exercise under the Statutory Residence Test, and coming back within five years can undo some tax savings.

P85 and your leaving-the-UK tax refund

PAYE assumes you will earn at a steady rate for the whole tax year. Each month it releases one twelfth of your allowance and one twelfth of each tax band. Stop work in month three and you have only had a quarter of your allowance, even though your total income for the year may be below £12,570 altogether. The difference is the refund.

Worked example: leaving in July

Say you earn £42,000 (£3,500 a month) in England and your last payday is 30 June 2026 — month 3 of the 2026/27 tax year. You then move abroad and have no further UK income.

If you were a Scottish taxpayer, the arithmetic uses Scottish rates on the same £7,357.50 of taxable pay: 19% on £991.75, 20% on £3,247.25 and 21% on the remaining £3,118.50, giving £1,492.77 deducted and therefore reclaimable. Scottish rates apply to non-savings income only, so savings and dividend income follow the UK rates wherever you live.

How to claim

P85 is free and can be submitted online through your Personal Tax Account, or printed and posted. You will need your leaving date, whether you are working abroad full time, and parts 2 and 3 of your P45 if your employer has issued one. Submit it after your final payday — sending it early just means HMRC has to redo the figures.

• Do not use P85 if you have to file a Self Assessment return for the year you leave (for example because you are self-employed, a landlord, or have untaxed investment income). Claim through the return and its residence pages instead.
• Claim a href="https://www.gov.uk/guidance/get-your-income-tax-right-if-youre-leaving-the-uk-p85">form P85 on GOV.UK. Refunds are paid by bank transfer or cheque; nominating someone in the UK to receive it is possible on the form.
• You can go back four tax years, so a departure you never told HMRC about is usually still reclaimable.

What you cannot reclaim

National Insurance is not refunded on leaving. Class 1 NI is calculated separately for each pay period against the £12,570-a-year primary threshold (8% up to £50,270, 2% above), so there is no annual reconciliation to unwind. Student loan deductions are not refunded either simply because you left; you remain liable and must tell the Student Loans Company you are going abroad.

Split-year treatment

Leaving usually means the tax year is split: UK resident up to your departure, non-resident after it. That matters because it stops the UK taxing your new overseas salary. Split-year treatment is not automatic — you have to qualify (the common routes are starting full-time work abroad, or ceasing to have a UK home) and claim it on a tax return. Whether non-residents keep the Personal Allowance depends on nationality and on the relevant double taxation agreement, so check your position rather than assuming.

Pensions and ISAs

A UK pension pot stays where it is and keeps growing. What changes is the tax relief on new contributions. Broadly, once you have no UK earnings you can still get relief on a limited amount of contributions for a few tax years after the year you leave, and after that relief stops. The annual allowance while you still have UK earnings is £60,000, or £10,000 if you have flexibly accessed a pension.

Transferring a pension to an overseas scheme is only sensible if the receiving scheme is a recognised one, and a transfer charge can apply. Take specialist advice before moving anything.

ISAs work the other way round:

• You can keep existing ISAs and they stay free of UK tax on interest, dividends and gains.
• You cannot subscribe new money once you stop being UK resident, apart from the tax year in which you leave. Crown servants working overseas and their spouses or civil partners are an exception.
• Your new country may not recognise the wrapper at all and may tax the income inside it.

The £20,000 ISA allowance is worth using before you go if you have taxable savings, particularly as the cash ISA limit is due to fall to £12,000 for under-65s from April 2027.

Renting out your UK home

UK rental profits are always taxable in the UK, resident or not. The wrinkle is collection: under the Non-Resident Landlord Scheme, your letting agent (or the tenant, if they pay you more than £100 a week and there is no agent) must deduct basic-rate tax from the rent and hand it to HMRC. You can apply for approval to receive rent gross and settle the tax yourself through Self Assessment instead.

Points to keep straight:

• The £1,000 property allowance still applies, as does the Rent-a-Room limit of £7,500 if you genuinely still live in the property for part of the year.
• Finance costs are not deductible from profits; they give a 20% tax reduction instead.
• Making Tax Digital for Income Tax starts from April 2026 for landlords with gross property income over £50,000, which means quarterly updates rather than one annual return.
• If you later sell, non-residents are within UK Capital Gains Tax on UK residential property and must report the disposal separately, and quickly, after completion. CGT rates on residential property are 18% and 24% with a £3,000 annual exempt amount.

State Pension and National Insurance abroad

You can claim the UK State Pension while living overseas and have it paid into a local or UK account. The full new State Pension is £241.30 a week and generally needs 35 qualifying years. The catch is uprating: annual increases are paid in the EEA, Switzerland, Gibraltar and countries with a reciprocal agreement, but pensions are frozen at the rate first paid in several popular destinations.

Years spent abroad create gaps in your record. Voluntary contributions can fill them: Class 3 costs £18.40 a week, while Class 2 at £3.65 a week is far cheaper and may be available if you are working abroad and meet the conditions. You apply using form CF83, and there is normally a time limit of several years for filling each gap, so it is worth requesting a State Pension forecast before you leave.

Staying non-resident once you have gone

Residence is decided by the Statutory Residence Test, not by your intentions. Two things catch leavers out. First, the automatic overseas test for full-time work abroad needs an average of 35 hours a week, fewer than 31 UK working days and fewer than 91 days in the UK. Second, if you fail the automatic tests, your permitted days depend on how many "ties" you keep — family, accommodation, work, 90 days in either of the previous two years, and, for leavers only, spending more days in the UK than anywhere else.

Keep a contemporaneous record of every arrival and departure, including boarding passes. Also note the temporary non-residence rules: if you return to the UK within five years, certain income and gains realised while away — such as disposals of assets you already held and some pension lump sums and close-company dividends — can be dragged back into UK tax in the year of return.

Before-you-go checklist

1. Get your final payslip and P45 and keep them.
2. Submit P85, or note that the claim belongs on your next tax return.
3. Tell HMRC to close down Self Assessment if you no longer need to file, or register if renting out property.
4. Request a State Pension forecast and decide about voluntary contributions.
5. Use the ISA allowance and check any higher-rate pension or Gift Aid relief you have not claimed for earlier years.
6. Tell the Student Loans Company, the Child Benefit office if relevant, and your bank and pension providers of your new address.
7. Set up a UK bank account you can keep, for refunds and rent.
8. Check the double taxation agreement with your destination before your first payday there.

What to do next

Start with the money you are most likely owed. Run your figures through the TaxFly tax refund checker to see roughly what a mid-year departure leaves unused, then submit P85 once your final payslip has landed. If you are also claiming back earlier years, the same refund checker covers the four-year window, so a departure you never reported is usually still worth revisiting.