Am I Entitled To A Tax Rebate If I Move From The UK To Spain?
If you move abroad from the UK, whether permanently or temporarily, it can cause tax implications. In some instances, you will have to pay tax, in other cases, you may receive a tax refund. To ensure that you comply with the necessary tax implications you may face, you need to let HMRC know if you move abroad for trips that last over a full tax year.
The best way to let HM Revenue and Customs know that you are moving abroad for a trip or permanently, is to fill out a P85 form. Using this form, HMRC can then calculate your tax for the length of time you were in the UK and determine whether you owe money or whether your are entitled to receive a tax rebate.
Do I Need to Pay UK Tax When I Live Abroad?
If you spend less than 16 days in the UK a year, you will have non-resident status. This will mean that you do not have to pay UK tax on income generated abroad. However, if you earn money in the UK, from savings, pensions, property or UK work, you will have to pay tax for these UK earnings.
As a rule of thumb, if you spend 183 days or more in the UK in a tax year, you are classed as resident for tax purposes.
For further information on whether you are classed as a tax resident in the UK, see
How to Avoid Double Taxation
One problem that affects expats is the issue of double taxation. This is where those living abroad may have to pay tax on the same income in two different countries. Fortunately, the UK has many double taxation agreements in place with many countries. This means that expats avoid paying tax twice on the same income. However, if tax rates differ, you may have to pay the higher rate.
With this in mind, it is essential to consider the taxation period for the country you are living in. Their tax year may differ from the UK's April to April calendar. In Spain the tax year starts on the 1st of January and ends on the 31st of December.
Expat Pensioners and Tax
Another issue for expats is the tax treatment in relation to their pensions. In the UK, most pensions come with 25% tax-free. However, many countries do not honour this and this will mean that expats will need to pay a lot more tax in their country of residence.
It's important to note that, in many cases, HMRC will deduct tax automatically from pensions. However, you can reclaim this money as long as you provide proof that you have paid the tax in another country.
With many issues facing expat pensioners, some accountants suggest cashing pensions in before moving abroad. This is because of the ‘frozen pension’ issue which means that expat pensioners do not enjoy the annual increase in their state pension. Often, pensions can be fixed at the level when they leave Britain, which reduces spending power.
If you are planning to move abroad, make sure that you don’t lose out. Ensure you seek advice on the tax implications of your earnings and pension.
Completing the P85 Form
You can complete and download a copy of the P85 form via HMRC at
You may also register a Government Gateway account and submit the form via your online account.
January 14, 2021
December 12, 2018