Special tax and National Insurance (NI) rules require international students to pay tax, especially on income earned working while studying, and on foreign income and gains, if their home country doesn’t have a Double Taxation Agreement (DTA) with the UK.
This is why some foreign students are eligible for a tax repayment when they leave the UK.
How your tax is treated depends on whether or not you are considered a resident in the UK for tax purposes.
- You are not a UK resident if you only study for a period of less than two years
- You are a UK resident if you are present in the country for 183 days or more in a tax year
- You are a resident if your country does not have a DTA with the UK
Income tax repayment
A foreign student working while studying in the UK may claim back tax, if it was deducted through the UK PAYE Tax system. Before leaving the UK, you must complete a form P85 ‘Leaving the UK – getting your tax right, which will inform HM Revenue & Customs that you are going back home and that you are claiming a tax refund. Send it to HMRC, along with parts 2 & 3 of your form P45 that will be provided to you by your employer.
What if you are unable to claim overpaid tax from previous tax years? Inform HMRC about them when you submit your form P85.
You should know, however, that there a time limits for claiming back tax, which is 4 years from the end of the tax year where you overpaid tax. For the tax year 2012/13, for example, which ended 5th April 2014, you can still claim by 5 April 2018.
Think you may be due a student tax refund?
Taxback.co.uk offer a no-refund – no-fee student tax refund service so you literally have nothing to lose. Find out if you’re owed a tax refund and you could literally be quids in.