What Will I Get Back in Tax Return

I have been living and working in the UK for nine years, but I have been thinking to go back to Italy for a while. The outcome of the EU referendum has convinced me to take the step and I am planning to move back at the end of the year.

A friend has told me that I can claim back taxes for all the years I have been working in the UK. Is it true? Can I also ask for my National Insurance contributions to be paid back?

For my first seven years in the UK I was employed full-time at different restaurants in London and for the past two years I have been self-employed as a tattoo artist.

A.G. via email

Leaving the UK: You  won't be able to reclaim any of the previous years' tax just because you are leaving the UK, and the same goes for your national insurance contributions

Camilla Canocchi of This is Money replies: The UK's decision to exit the European Union has created huge uncertainty on many fronts, including what destiny awaits the millions of Europeans living and working in the UK.

As an Italian citizen myself living and working in the UK for over 10 years, I understand how this can be unsettling and may have contributed to your decision to leave the country.

Changes to your rights as a EU worker in the UK however, will not take place anytime soon, and all will depend on the outcome of negotiations.

This week Government lawyers said that the new Conservative Prime Minister Theresa May would not trigger article 50 of the Lisbon treaty at least until next year. The comments are in line with those by the new minister in charge of Brexit, David Davis, who last week said that the UK will trigger article 50 'before or by the start of next year'.

Once the Government invokes it, the UK has two years to negotiate the terms of its exit from the European Union.

I have put your questions to a tax expert.

Tim Walford-Fitzgerald, tax principal at the chartered accountants HW Fisher & Company, says:Unfortunately you won't be able to reclaim any of the previous years' tax just because you are leaving the UK.

If moving around employers meant that you mistakenly overpaid tax for the last two tax years in which you were an employee, then you may be able to recover those overpayments, but anything more than four years old is lost.

You will still need to complete a tax return for the year you leave the UK, but you would be entitled to a full year's allowances, despite not being resident here for part of the year.

Similarly, your National Insurance contributions have been paid and don't get refunded. You should however get credit in Italy for the UK contributions you have paid. The precise rules vary from benefit to benefit.

For example the UK takes into account contributions paid overseas to determine whether you get a pension at all, but not the amount you get. You can end up with two (or more) state pensions built up from working around Europe.

The crucial thing is for you to obtain a copy of your National Insurance statement so you have evidence of your contributions for the Italian authorities. This can be requested online - see the 'Check you National Insurance record' page on the Gov.uk website - but you will want to wait a while until you have paid all of this year's contributions.

As you are self-employed you pay Class 2 National Insurance, which isn't payable for the current year until 31 January 2018.

Of course, Italy giving credit for your UK contributions is based on the existing law, arising from an EU regulation to make life easy for internationally mobile workers.

If the UK finds itself outside the EEA at the end of the negotiation process the regulations won't apply, so Italy could ignore those years you've paid in for.

Nine years of contributions is a lot to lose from your pensions' history and depending on precise dates it may be just under the 10 tax years needed to get any UK state pension - you need to check the dates and consider buying an extra year of pension entitlement.

That way you will get a UK pension regardless of how acrimonious the final split turns out to be.

Tax return: As a self-employed wanting to let the taxman know that you are leaving the country, you have to send your tax return via post and complete the 'residence' section - form SA109

Camilla Canocchi at This is Money adds: As our expert has mentioned, you will still need to file a tax return for the financial year that you leave the UK - in your case 2016/17.

However, you can't file your tax return online if you have to inform the taxman that you are leaving the country - you need to do it via post and complete the 'residence' section in your tax return - form SA109.  But remember that the deadline for that is three months earlier than online - 31 October instead of 31 January.

You can find more information about tax and leaving the UK here.

Tim Walford-Fitzgerald adds: The tax return for last year (2015/16) will need to be completed but another return will still be needed for 2016/17.

As you are self-employed, you won't be due a refund in the way that an employee who pays tax under PAYE would be due a repayment. Employees would normally use the form P85 to notify HMRC that they have left the country and claim a refund.

But since you are entirely under self-assessment, you probably won't have paid any tax for 2016/17 just yet.

However, you will need to take your exit from the UK into account when you complete your tax return and consider your payments on account for 2016/17.

The first of these interim payments is made in January 2017 and the second is payable 31 July 2017.

The instalments are normally half of the previous year's tax liability, so the 2016/17 payments are effectively based on the profits for 2015/16. As you will only have a part year of profits in 2016/17 they may be lower- depending on how work has been- so you could reduce the instalments.

If the reduced instalments don't cover your actual liability for 2016/17 then HMRC will charge interest and possibly a penalty if the estimate was too wild.

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What Will I Get Back in Tax Return

Source: https://www.thisismoney.co.uk/money/experts/article-3699260/ASK-EXPERT-ve-decided-Italy-Brexit-claim-tax-pension-contributions.html

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