Rohit called me three weeks before his flight to Mumbai. After eight years in Manchester, he'd accepted a job back home. Salary negotiations done, flat lease ended, removal company booked. But one thing nagging him: "I've been paying UK tax all these years. Am I owed anything back?"
The answer was yes. £2,847, to be exact. Tax overpaid because he left mid-year. Another £380 in unclaimed work expenses for mileage to client sites.
Most NRIs leaving the UK don't realise they're walking away from money that's rightfully theirs. HMRC won't chase you to give it back. You have to claim it.
This guide walks you through exactly how to do that before your departure.
Why You Might Be Owed a Tax Refund When Leaving
The UK tax system assumes you'll work the entire year. Your employer spreads your £12,570 personal allowance across 12 months. Each month, you get 1/12th of your tax-free amount.
When you leave mid-year, this calculation breaks.
Here's what happens:
If you worked January to September and then flew to India, you only received 9/12ths of your personal allowance through your pay packets. But you're entitled to the full £12,570 for that year. The remaining 3/12ths (£3,142) should have been tax-free. Instead, you paid 20% or 40% tax on it.
HMRC owes you that difference back.
Common refund scenarios for NRIs leaving UK:
Situation | Likely Refund Reason |
|---|---|
Left mid-tax year | Unused personal allowance |
Had periods of unemployment before leaving | Overpaid tax during working months |
Claimed flat-rate expenses but never filed | Uniform, tools, professional subscriptions |
Used own car for work travel | Unclaimed mileage allowance |
Worked from home regularly | Home office expenses never claimed |
Paid into pension but left before tax relief applied | Pension tax relief due |
👉 Tip: The UK tax year runs April 6 to April 5. Leaving in October means you've worked only 6 months of the tax year – prime territory for a refund.
The Two Key Forms: P85 vs Self Assessment
Your route to claiming depends on your circumstances.
Form P85: For Most Employed NRIs
Use form P85 if:
- You were employed and paid through PAYE
- You don't already file Self Assessment tax returns
- You want to inform HMRC you're leaving the UK
- You want to claim a tax refund for your departure year
The P85 serves two purposes: notifying HMRC of your departure and triggering a tax refund calculation.
Self Assessment (SA100 + SA109): For Self-Employed or Complex Cases
Use Self Assessment if:
- You're self-employed or have business income
- You already file tax returns
- You have income over £150,000
- You have capital gains to report
- You want to claim split-year treatment formally
With Self Assessment, you'll complete the main SA100 form plus the SA109 supplementary pages for residence and domicile status.
Key difference: You cannot use HMRC's online system to file SA109 – you must either use commercial tax software or submit paper forms by post.
Step-by-Step: Claiming Your Refund Using Form P85
Step 1: Gather Your Documents
Before starting, collect:
- P45 from your employer (Parts 2 and 3) – This shows your earnings and tax paid until your leaving date. Ask HR for this on your last working day.
- National Insurance number
- Your UK address (current)
- Your overseas address (where you're moving to in India)
- UK bank account details – Keep this account open until your refund arrives
- Details of any other UK income (rental property, investments, pensions)
- Dates of departure and any planned UK visits
If you don't have your P45 yet, you can still submit the P85. Tell HMRC why it's missing.
Step 2: Complete the P85 Form
You can find the P85 on GOV.UK. There are two submission methods:
Online (after you've left the UK):
- Sign in with Government Gateway credentials
- Fill in the form online
- Submit digitally
- Processing time: approximately 6 weeks
By Post (if you haven't left yet):
- Complete the form on-screen
- Print it out
- Post with your P45 Parts 2 and 3
- Use tracked/signed delivery
- Processing time: 8-12 weeks
Important: If you have NOT yet left the UK, you must use the postal version. The online option is only available after departure.
Step 3: Answer the Residence Questions Carefully
The P85 asks about your future plans to determine your residence status. Answer honestly:
- Are you leaving permanently? If moving to India indefinitely, say yes.
- Will you be working abroad? If you have an Indian job lined up, say yes.
- Do you expect to return to the UK? If unsure, say "don't know" – this is acceptable.
- Will you have UK income after leaving? Declare rental income, UK pensions, etc.
HMRC uses these answers to update your tax records and calculate any refund.
Step 4: Submit and Track
After submission:
Online claims: You receive a reference number immediately. Use this to track progress through your Government Gateway account.
Postal claims: Keep proof of postage. HMRC doesn't send acknowledgment of receipt.
To check status, call HMRC's Income Tax helpline: +44 135 535 9022 (from outside UK) or 0300 200 3300 (within UK).
Step 5: Receive Your Refund
Here's where it gets tricky for NRIs leaving the UK.
Current refund methods (as of 2025):
- Cheque posted to your UK or overseas address
- Payment to a UK bank account (limited availability)
- Cheque to a nominee in the UK
The challenge: HMRC currently cannot make direct bank transfers for P85 refunds. They issue cheques in GBP. If you're already in India, cashing a sterling cheque is problematic.
Solutions:
- Keep your UK bank account open until the refund arrives. This is the simplest approach.
- Nominate someone in the UK to receive the cheque on your behalf. They can pay it into their account and transfer to you.
- Use your UK bank's mobile cheque deposit if available (some banks like Barclays, HSBC offer this via app).
Coming soon: HMRC plans to introduce UK bank transfers for P85 refunds from Autumn 2025. Check GOV.UK for updates.
👉 Tip: Apply for your refund 4-6 weeks before leaving. Even if processing takes longer, your UK bank account will still be active to receive the cheque.
Claiming Work Expenses You Never Filed For
Beyond the P85 refund, you may be owed money for work expenses. Many NRIs don't realise these can be claimed going back 4 years.
Flat-Rate Expenses (No Receipts Needed)
HMRC allows fixed deductions for certain industries. You don't need receipts – just proof you worked in that role.
Industry | Annual Flat Rate |
|---|---|
Healthcare workers | £125 |
Engineers | £140 |
Construction workers | £140 |
Airline pilots | £1,022 |
Electricians | £140 |
Plumbers | £140 |
Full list: HMRC Flat Rate Expenses
Tax relief calculation: If you're a 20% taxpayer claiming £140 flat rate, your refund is £28 per year. Across 4 years = £112.
Mileage Allowance
If you used your own vehicle for work travel (not commuting), you can claim:
- 45p per mile for first 10,000 miles
- 25p per mile after that
- Minus any amount your employer reimbursed
Example: You drove 8,000 business miles in the year. Your employer paid 25p/mile.
Claimable: 8,000 × (45p - 25p) = £1,600 tax relief Tax refund at 20%: £320
Evidence required from October 2024: HMRC now requires mileage logs showing:
- Date of each journey
- Start and end postcodes
- Reason for travel
- Miles covered
Professional Subscriptions
If you paid membership fees to professional bodies related to your job:
- Engineering institutions (ICE, IET, IMechE)
- Accounting bodies (ACCA, CIMA, ICAEW)
- Medical councils (GMC, NMC)
- Legal associations (SRA, Law Society)
These are tax deductible. HMRC maintains an approved list.
How to Claim Work Expenses
Use Form P87 if your total expenses are £2,500 or less per year.
Process (since October 2024):
- Download P87 from GOV.UK
- Complete it on-screen
- Print and post with supporting evidence
- For flat-rate expenses only: can claim online from 31 October 2024
For expenses over £2,500 per year, you must file a Self Assessment tax return.
Can you combine P85 and P87?
Yes. Submit them separately:
- P85 for your departure notification and tax refund
- P87 for work expenses (if not included in P85)
Some NRIs submit both together in one envelope to streamline the process.
Timeline: When to Start and What to Expect
Weeks Before Leaving | Action |
|---|---|
8-12 weeks | Gather documents, request tax history letter from HMRC |
6-8 weeks | Complete and submit P85 (postal) |
4-6 weeks | Submit P87 for work expenses |
2 weeks | Collect P45 from employer |
1 week | Confirm UK bank account stays open |
Departure day | Save copies of all submissions |
Processing times:
- P85 online: 6 weeks typical
- P85 postal: 8-12 weeks
- P87 work expenses: 8-12 weeks
- Complex Self Assessment: 4-6 weeks (online), 8-12 weeks (paper)
- Refund payment after approval: 5-10 working days
During peak periods (January-April), add 2-4 weeks to these estimates.
The Indian Resident Question: Will India Tax Your UK Refund?
Good news: A UK tax refund is a return of money you already earned – not new income. India doesn't tax refunds of previously taxed income.
Your refund represents overpaid UK tax being returned. It's not employment income, interest, or capital gains. When you receive it in India, it's simply money you were always entitled to.
No declaration required on your Indian tax return for the refund itself.
The situation differs if you have ongoing UK income (rental property, pension). That may require Indian disclosure depending on your residential status.
Special Situation: Split-Year Treatment
If you leave partway through the UK tax year, you may benefit from split-year treatment. This divides the tax year into:
- UK part: When you were resident (taxed on worldwide income)
- Overseas part: When you were non-resident (taxed only on UK-source income)
Why it matters:
Without split-year treatment, you might be taxed as UK resident for the entire year – meaning your Indian salary after arriving could theoretically be UK-taxable.
Split-year treatment prevents this by treating you as non-UK-resident from your departure date.
How to claim:
If filing Self Assessment, claim it on form SA109. You'll need to identify which "case" applies (there are 8 scenarios for leavers).
Most common for NRIs: Case 4 – Starting full-time work overseas.
To qualify:
- You must work full-time abroad for at least a year
- You must have been UK resident in at least one of the previous 3 years
- You can visit UK for up to 90 days (working max 30 days)
If you're only using P85 (not filing Self Assessment), HMRC will apply split-year treatment automatically if appropriate based on your answers.
Personal Allowance: Are You Entitled as a Non-Resident?
Once you leave the UK, you become a non-UK resident. Can you still claim the £12,570 personal allowance?
Yes, if you are:
- A British citizen (regardless of where you live)
- A citizen of an EEA country
- A resident of a country with a UK tax treaty that grants personal allowance rights
India has a Double Taxation Agreement (DTAA) with the UK. Under this treaty, Indian residents can claim UK personal allowance on their UK-source income.
This matters if you:
- Have UK rental property income
- Receive a UK pension
- Have UK investment income
You can claim personal allowance using Form R43 (for non-residents) for any future tax years where you have UK income.
Common Mistakes to Avoid
1. Closing Your UK Bank Account Too Early
Biggest mistake NRIs make. HMRC cannot transfer refunds abroad. They send cheques in pounds. Without a UK account, you'll struggle to cash them.
Solution: Keep at least one UK account open for 6 months after departure.
2. Not Collecting Your P45
Your P45 is essential evidence. Without it, HMRC may delay processing while verifying your earnings.
Solution: Request P45 on your last working day. Follow up if not received within 2 weeks.
3. Missing the 4-Year Window
You can claim refunds for the current year plus 4 previous years. Leave it too long and money expires.
Example: If leaving in December 2025, you can still claim for tax years 2021/22, 2022/23, 2023/24, 2024/25, and 2025/26.
4. Forgetting Work Expenses
Most NRIs claim P85 but forget P87. Those unclaimed mileage and uniform expenses add up over 4 years.
5. Using Tax Refund Companies Without Understanding Fees
Many companies advertise "free" tax refund services but take 25-40% commission. For a £3,000 refund, that's £750-£1,200 gone.
Better approach: File directly with HMRC. The forms aren't complicated. If you need help, a UK accountant charges a flat fee (typically £100-200), not a percentage.
What If You've Already Left Without Claiming?
Don't panic. You can still claim from India.
Options:
Submit P85 online: Available once you've left the UK. You'll need Government Gateway credentials.
Post the form: Print P85, complete it, and mail to HMRC from India. Include your P45 if you have it.
Use Form R43: If you're claiming personal allowance and tax refund on UK income as a non-resident, this form is more appropriate for ongoing claims.
Address for postal claims: Pay As You Earn and Self Assessment HM Revenue and Customs BX9 1AS United Kingdom
Refund cheques can be sent to your Indian address, though you'll face the challenge of cashing a GBP cheque without a UK account.
Checklist Before You Leave
Documents to collect:
- [ ] P45 from employer
- [ ] P60 for previous tax years (if claiming work expenses)
- [ ] National Insurance number
- [ ] UTR number (if you filed Self Assessment)
- [ ] Mileage logs for work travel
- [ ] Receipts for professional subscriptions
- [ ] UK bank account details
Actions to take:
- [ ] Submit P85 form
- [ ] Submit P87 for work expenses
- [ ] Confirm UK bank account remains open
- [ ] Set up mail forwarding or trusted contact in UK
- [ ] Save digital copies of all submissions
- [ ] Note HMRC reference numbers
After arriving in India:
- [ ] Monitor UK bank account for refund
- [ ] Check HMRC online account for updates
- [ ] Convert and transfer funds once received
- [ ] Update NRI account status with Indian banks
Final Thoughts
Leaving the UK is emotionally charged. Between farewell dinners and packing boxes, tax forms feel like the last thing you want to deal with.
But those forms represent real money. NRIs routinely leave £2,000-£5,000 unclaimed simply because they didn't know they could ask for it.
Spend two hours gathering documents and completing P85/P87. Keep your UK bank account open for six months. That small effort could fund your first few months settling back in India.
The UK taxman took from every pay cheque. Make sure you take back what's yours before you go.
Planning your return to India?
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