If you decide to leave the UK other than for a short holiday, you must inform HMRC using a P85 form. This is because leaving the country for a longer period of time can affect your tax status.
What if I submit Self Assessment tax returns?
If you complete one, you can use your Self Assessment return to tell HMRC that you are leaving. Submit a P85 if you are leaving after submitting your final tax return, or if you don’t complete one.
Why do HMRC need me to submit a P85?
HMRC will use the information provided on the form to decide whether you are due a tax refund. They will also use it to decide your residency status for tax purposes.
Residency is a complex issue and is based on the connections you have to a country. It is possible to be a tax resident of more than one country simultaneously.
You are a UK resident if you have always lived in the UK and never lived in another country. There’s no minimum amount of time you must spend in the UK to make you a tax resident. You’re a tax resident for a particular year if you spend at least 183 days in the UK during that tax year. It is possible to be a tax resident one year, and not the next, or vice versa.
You are likely to be seen as resident in the UK if you spend most of your time in the UK in that year.
Other factors are also important when deciding whether you are resident or non-resident, for instance:
If you have been a UK resident in the past.
Your family, work, and social connections are in the UK.
The reasons for your visits to the UK.
Why is my tax residence status important?
Your tax residence affect where you pay tax on any earnings. For instance, you might leave the UK for a short holiday. In that case you’re unlikely to need to pay income tax in the country you visit.
However, if you earn money from an overseas employer, or if you work overseas for a UK employer, it gets a bit more complicated. The P85 helps HMRC work out how much tax you need to pay, and where.
Once you have completed form P85 and have left the UK for at least three years you will typically be classed as ‘not resident and not ordinarily resident’ for tax purposes. However, form P85 asks for details of income which is ongoing in the UK like rental income and you may have to complete a self-assessment tax return in this case.
If you’re resident in the UK and another country at the same time, check whether a double taxation agreement exists between the countries. Double taxation agreements mean that you only pay tax in one country, rather than both. The information you provide on form P85 will be used to decide whether a double taxation agreement is in place with the country you are going to.