Working Out UK Tax for Working Holiday Makers

Tax For Working Holiday Makers In The UK

Working Holiday Makers get the best of both worlds – they get to explore the UK and earn money at the same time. If only at the end of it all you could go home without a hitch, right? Well there’s a few things to consider if you’ve been working in the UK and one of them is Tax. You will be required to submit a tax return and in turn hopefully bag yourself a tax refund.

But look on the bright side. If you have everything in order, you will get a tax rebate, and avoid penalties, if you fail to take care of your UK tax return then you could be losing out on earnings from your time in the UK.

UK Tax For Working Holiday Makers

  • If you pay the correct amount of tax, you do not need to fill out a tax return. But because tax is automatically deducted by your employer through the PAYE system, it is possible that you may overpay tax. There are a lot of reasons why this happens, one of which is being assigned to an incorrect tax code, which is the basis for the amount of tax to be deducted from your income.
  • If you work as a contractor or are self-employed, you need to do a tax return.
  • If you are self-employed and not working or connected with a limited company, you must register with HM Revenue & Customs (HMRC) as self-employed and then complete a self-assessment tax return.
  • The amount of tax you pay will depend on what is left of your income when the non-taxable personal allowance is deducted, and the tax threshold you belong in. For the tax year 2017-18 for example, personal allowance is at £11,500.
  • Based on what was left after personal allowance, 20% is the deduction for the basic rate, 40% for the higher rate, and 45% for the additional rate. Individuals with higher income will have to pay a different tax rate. Your contribution will be automatically deducted from your salary regularly through the Pay As You Earn – PAYE Tax Refunds program along with your National Insurance contribution. You may wish to use Self Assessment UK to deal with your UK Tax Returns when the time comes.
  • You only work part of the tax year.
  • You paid emergency tax and made National Insurance (NI) contributions before your NI number and your actual tax code were
    assigned to you. You know you are paying emergency tax if you still haven’t received your tax code, but are already earning an income. (read How to find out if you’re on emergency tax)
  • You worked for more than one employer.
  • To claim tax back, you should have form P45 or P60. The former is given to you when you leave a job during a tax year, while the latter is given to you after the end of the tax year. You also need to keep all documents that will prove just how much tax you have paid, such as receipts and other similar records.

Apply for a PAYE tax refund 

Related articles:

Why is your p60 important

The 2017-2018 Tax Year in a nutshell

UK Personal Tax Allowance for 2017-2018

Photo by Clay Banks on Unsplash

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