Tax on your UK income if you live abroad

Overview

You usually have to pay tax on your UK income even if you’re not a UK resident. Income includes things like:

pension

rental income

savings interest

wages

If you’re eligible for a Personal Allowance you pay Income Tax on your income above that amount. Otherwise, you pay tax on all your income.

The country where you live might tax you on your UK income. If it has a ‘double-taxation agreement’ with the UK, you can claim tax relief in the UK to avoid being taxed twice.

You do not normally pay tax when you sell an asset, apart from on UK property or land.

When tax is not due or is already deducted

Non-residents do not usually pay UK tax on:

the State Pension

interest from UK government securities (‘gilts’)

If you live abroad and are employed in the UK, your tax is calculated automatically on the days you work in the UK.

Income Tax is no longer automatically taken from interest on savings and investments.

When to report your income to HM Revenue and Customs (HMRC)

You usually have to send a Self Assessment tax return if:

you rent out property in the UK

you work for yourself in the UK

you have a pension outside the UK and you were UK resident in one of the 5 previous tax years

you have other untaxed income

You do not need to report your income to HMRC if you’ve already claimed tax relief under a ‘double-taxation agreement’.

If you’re a non-UK resident and were stuck in the UK because of coronavirus (COVID-19)

If you could not leave the UK when you intended because of coronavirus, you will not have to pay UK tax on employment income that:

you earned between the dates you intended to leave and when you actually left

you paid tax on in your home country

You must file a Self Assessment tax return, together with a completed SA109 form. Use the ‘other information’ section of your SA109 to include:

the dates you were stuck in the UK because of coronavirus

what you earned in that time

confirmation you paid tax on these earnings in another country

If you’re unsure how to file a Self Assessment return, you can get advice from a professional, like an accountant.

HMRC may ask you for proof that you:

could not leave the UK when you intended, for example an NHS isolation note

paid tax in another country on what you earned while stuck in the UK

left the UK as soon as you reasonably could

You may have to pay tax in the UK if you cannot prove you were unable to leave the UK and did not leave as soon as you could.

Sending a Self Assessment tax return

You cannot use HMRC’s online services to tell them about your income if you’re non-resident. Instead, you must do one of the following:

fill in a Self Assessment tax return and an SA109 form and send by post

use commercial Self Assessment software that supports SA109 reporting (this may appear as a ‘residence, remittance basis etc’ section)

get a tax professional to report your UK income for you

You’ll be fined if you miss the deadline - it’s earlier if you’re sending your return by post (31 October).

If you have overpaid

Apply for a refund if you think you’ve paid too much tax. This might happen if tax is deducted automatically (for example by your bank) but your total UK income is below your Personal Allowance.

Send form R43 to HMRC, or claim the refund in your Self Assessment tax return if you’re already doing one.

HMRC will usually send refunds by cheque. If you want HMRC to send a refund straight to your bank account, include your bank account number and sort code on your tax return. You need to include this information each time you complete a tax return.

Get help from a professional (like an accountant) if you need advice.

Rental income

You need to pay tax on your rental income if you rent out a property in the UK.

You may also need to pay tax if you make a gain when you sell property or land in the UK.

If you live abroad for 6 months or more per year, you’re classed as a ‘non-resident landlord’ by HM Revenue and Customs (HMRC) - even if you’re a UK resident for tax purposes.

How you pay tax

You can get your rent either:

in full and pay tax through Self Assessment - if HMRC allows you to do this

with tax already deducted by your letting agent or tenant

Get your rent in full

If you want to pay tax on your rental income through Self Assessment, fill in form NRL1i and send it back to HMRC.

If your application is approved, HMRC will tell your letting agent or tenant not to deduct tax from your rent and you’ll need to declare your income in your Self Assessment tax return.

HMRC will not approve your application if your taxes are not up to date, for example you’re late with your tax returns or payments.

Get your rent with tax deducted

Your letting agent or tenant will:

deduct basic rate tax from your rent (after allowing for any expenses they’ve paid)

give you a certificate at the end of the tax year saying how much tax they’ve deducted

If you do not have a letting agent and your tenant pays you more than £100 a week in rent, they’ll deduct the tax from their rent payments to you.

Filling in your tax return

You need to declare your rental income in a Self Assessment tax return unless HMRC tells you not to.

You cannot use HMRC’s online services. Instead, you need to:

send your tax return by post

use commercial software

get help from a professional, like an accountant

You need to complete the ‘residence’ section (form SA109 if you’re sending it by post) and the ‘property’ section (form SA105).

If you’ve paid too much tax

You can ask for a refund if both:

your rental income is lower than your Personal Allowance

your letting agent (or tenant) already deducted basic rate tax on it

Fill in form R43 and send it back to HMRC.

You cannot ask for a refund if you’re not eligible for a Personal Allowance.

Companies and trusts

A company is a ‘non-resident landlord’ if it receives income from renting UK property and either:

its main office or business premises is outside the UK

it’s incorporated outside the UK

Your company will get its rent in full if it’s resident in the UK for tax purposes - this includes UK branches of companies based abroad if they’re registered for Corporation Tax.

A trust is a ‘non-resident landlord’ if it receives income from renting UK property and all trustees usually live outside the UK.

Apply to get your rent in full

Companies should use form NRL2i to ask HMRC to get rental income in full. Trusts should use form NRL3i.

Selling or inheriting assets

If you’re not a UK resident, you do not usually pay either:

Capital Gains Tax if you sell most assets in the UK

Inheritance Tax if you inherit assets located in the UK

When you might be taxed

You’ll only have to pay Capital Gains Tax if:

you make a gain when you sell property or land in the UK

assets you sold were used in a UK branch of a foreign business

you used to be a UK resident and you return to the UK within 5 years of leaving

If you inherited the asset

You’ll only have to pay Inheritance Tax if both:

you inherited property, money or shares in the UK

the deceased’s estate does not have the money to pay the Inheritance Tax

The normal rules for paying Income Tax apply if you get income from something you’ve inherited, for example rental income from a UK property.

If you’re a non-resident and you inherit UK property or land you have to pay tax on any gains you make when you sell it. You do not pay tax if you inherit and sell other assets, for example UK shares.

Personal Allowance

You’ll get a Personal Allowance of tax-free UK income each year if any of the following apply:

you hold a British passport

you’re a citizen of a European Economic Area (EEA) country

you’ve worked for the UK government at any time during that tax year

You might also get it if it’s included in the double-taxation agreement between the UK and the country you live in.

Claim the Personal Allowance

If you’re not a UK resident, you have to claim the Personal Allowance at the end of each tax year in which you have UK income. Send form R43 to HM Revenue and Customs (HMRC).

If you're taxed twice

You may be taxed on your UK income by the country where you’re resident and by the UK.

You may not have to pay twice if the country you’re resident in has a ‘double-taxation agreement’ with the UK. Depending on the agreement, you can apply for either:

partial or full relief before you’ve been taxed

a refund after you’ve been taxed

Each double-taxation agreement sets out:

the country you pay tax in

the country you apply for relief in

how much tax relief you get

If the tax rates in the 2 countries are different, you’ll pay the higher rate of tax. The tax year may start on different days in different countries.

Double taxation agreements do not apply to tax on gains from selling UK residential property.

What income you can claim for

You can claim for income including:

most pensions - most UK government (such as civil service) pensions are only taxed in the UK

wages and other pay (including self-employment)

bank interest

dividends - special rules apply, which HM Revenue and Customs (HMRC) explain in section 10 of ‘Residence, Domicile and the Remittance Basis’

How to claim tax relief

Check HMRC’s ‘Double-taxation digest’ for countries that have an agreement with the UK, and how income like pensions and interest is taxed.

You need to look at the relevant tax treaty for the rules on other types of income like wages and rent.

Fill in a claim form

Use the correct form depending on whether you’re resident in:

Australia

Canada

France

Germany

Ireland

Japan

New Zealand

Netherlands

South Africa

Spain

Sweden

Switzerland

United States of America

If you’re resident somewhere else, use HMRC’s standard claim form.

When you’ve filled in the form, send it to the tax authority in the country where you’re resident. They’ll confirm your eligibility and either send the form to HMRC or return it to you to send on (use the address on the form).

There’s a different form for individuals and companies claiming a refund on dividends paid by UK Real Estate Investment Trusts.

If you need help

For help claiming double-taxation relief, you can:

get professional tax help, for example from a tax adviser

contact HMRC

Capital Gains Tax

You only pay Capital Gains Tax if you make a gain on UK property or land. You do not pay it on other UK assets, such as UK shares. You will not usually need to make a claim for assets you do not pay tax on - but you should check the relevant double taxation agreement.

If you return to the UK after being non-resident, you may have to pay tax on any assets you owned before you left the UK - even if you’ve paid tax on any gains in the country you moved to. You can usually claim double-taxation relief.

Dual residents

You can be resident in both the UK and another country (‘dual resident’). You’ll need to check the other country’s residence rules and when the tax year starts and ends.

HMRC has guidance for how to claim double-taxation relief if you’re a dual resident.

If you're a UK resident

You can live abroad and still be a UK resident for tax, for example if you visit the UK for more than 183 days in a tax year.

Pay tax on your income and profits from selling assets (such as shares) in the normal way.

You usually have to pay tax on your income from outside the UK as well.


Tax on your private pension contributions

Overview

Your private pension contributions are tax-free up to certain limits.

This applies to most private pension schemes, for example:

workplace pensions

personal and stakeholder pensions

overseas pension schemes that qualify for UK tax relief - ask your provider if it’s a ‘qualifying overseas pension scheme’

Pension schemes must be registered with HMRC to qualify for tax relief. Check with your pension provider if you’re unsure if your scheme is registered or not.

You pay tax when you take money out of a pension.

Limits to your tax-free contributions

You usually pay tax if savings in your pension pots go above:

100% of your earnings in a year - this is the limit on tax relief you get

£40,000 a year - check your ‘annual allowance’

£1,073,100 in your lifetime - this is the lifetime allowance

You also pay tax on contributions if your pension provider:

is not registered for tax relief with HM Revenue and Customs (HMRC)

does not invest your pension pot according to HMRC’s rules

Tax relief

You can get tax relief on private pension contributions worth up to 100% of your annual earnings.

You get the tax relief automatically if your:

employer takes workplace pension contributions out of your pay before deducting Income Tax

rate of Income Tax is 20% - your pension provider will claim it as tax relief and add it to your pension pot (‘relief at source’)

If your rate of Income Tax in Scotland is 19% your pension provider will claim tax relief for you at a rate of 20%. You do not need to pay the difference.

UK tax relief is also available on contributions made to certain types of overseas pension schemes.

It’s up to you to make sure you’re not getting tax relief on pension contributions worth more than 100% of your annual earnings. HM Revenue and Customs (HMRC) can ask you to pay back anything over this limit.

Relief at source

You get relief at source in all personal and stakeholder pensions, and some workplace pensions.

To get relief at source

Before paying into a scheme, you need to agree to certain conditions about your contributions (‘make declarations’). Your pension provider will tell you what these are.

You also need to give your pension provider your:

full name and address

date of birth

National Insurance number

employment status - or tell them if you’re retired, a full time student, a carer or aged under 16

Your employer may do this for you if you’re automatically enrolled in their pension scheme.

Your pension provider will let you know if this is the case and ask you to confirm your details are correct. You must do this within 30 days.

When you have to claim tax relief

You may be able to claim tax relief on pension contributions if:

you pay Income Tax at a rate above 20% and your pension provider claims the first 20% for you (relief at source)

your pension scheme is not set up for automatic tax relief

someone else pays into your pension

Claim tax relief in England, Wales or Northern Ireland

You can claim additional tax relief on your Self Assessment tax return for money you put into a private pension of:

20% up to the amount of any income you have paid 40% tax on

25% up to the amount of any income you have paid 45% tax on

You can also call or write to HMRC to claim if you pay Income Tax at 40%.

Claim tax relief in Scotland

1% up to the amount of any income you have paid 21% tax on

21% up to the amount of any income you have paid 41% tax on

26% up to the amount of any income you have paid 46% tax on

You can call or write to HMRC to claim if you do not fill in a Self Assessment tax return.

If your pension scheme is not set up for automatic tax relief

Claim tax relief in your Self Assessment tax return if your pension scheme is not set up for automatic tax relief.

Call or write to HMRC if you do not fill in a tax return.

You cannot claim tax relief if your pension scheme is not registered with HMRC.

If someone else pays into your pension

When someone else (for example your partner) pays into your pension, you automatically get tax relief at 20% if your pension provider claims it for you (relief at source).

If you’re in a workplace pension that allows other people to contribute you may need to claim the tax relief on those contributions - call or write to HMRC.

If you do not pay Income Tax

You still automatically get tax relief at 20% on the first £2,880 you pay into a pension each tax year (6 April to 5 April) if both of the following apply to you:

you do not pay Income Tax, for example because you’re on a low income

your pension provider claims tax relief for you at a rate of 20% (relief at source)

Life insurance policies

You cannot get tax relief if you use your pension contributions to pay a personal term assurance policy, unless it’s a protected policy.

Personal term assurance is a life insurance policy that either:

ends when the first insured person dies

insures people who are all from the same family

Annual allowance

Your annual allowance is the most you can save in your pension pots in a tax year (6 April to 5 April) before you have to pay tax.

You’ll only pay tax if you go above the annual allowance. This is £40,000 this tax year.

What counts towards the annual allowance

Your annual allowance applies to all of your private pensions, if you have more than one. This includes:

the total amount paid in to a defined contribution scheme in a tax year by you or anyone else (for example, your employer)

any increase in a defined benefit scheme in a tax year

If you use all of your annual allowance for the current tax year

You might be able to carry over any annual allowance you did not use from the previous 3 tax years.

When your annual allowance is lower than £40,000

Your annual allowance might be lower if you have:

flexibly accessed your pension pot

a high income

If you flexibly access your pension

Your annual allowance might be lower if you flexibly access your pension. For example, this could include taking:

cash or a short-term annuity from a flexi-access drawdown fund

cash from a pension pot (‘uncrystallised funds pension lump sums’)

The lower allowance is called the ‘money purchase annual allowance’.

If you have a high income

You’ll have a reduced (‘tapered’) annual allowance in the current tax year if both:

your ‘threshold income’ is over £200,000

your ‘adjusted income’ is over £240,000

The threshold income and adjusted income limits are different for earlier tax years.

Work out your reduced annual allowance.

If you go above the annual allowance

You’ll get a statement from your pension provider telling you if you go above the annual allowance in their scheme. If you’re in more than one pension scheme, ask each pension provider for statements.

You can also use a calculator to work out how much you’ve gone above the allowance.

If you go over your annual allowance, either you or your pension provider must pay the tax.

Fill in the ‘Pension savings tax charges’ section of a Self Assessment tax return to tell HMRC about the tax, even if your pension provider pays all or part of it. You’ll need form SA101 if you’re using a paper form.

You can still claim tax relief for pension contributions on your Self Assessment tax return if you’re above the annual allowance.

HMRC does not tax anyone for going over their annual allowance in a tax year if they:

retired and took all their pension pots because of serious ill health

died

Lifetime allowance

You usually pay tax if your pension pots are worth more than the lifetime allowance. This is currently £1,073,100.

You might be able to protect your pension pot from reductions to the lifetime allowance.

Check how much lifetime allowance you’ve used

Ask your pension provider how much of your lifetime allowance you’ve used.

If you’re in more than one pension scheme, you must add up what you’ve used in all pension schemes you belong to.

What counts towards your allowance depends on the type of pension pot you get.

Type of pension pot | What counts towards your lifetime allowance

Defined contribution - personal, stakeholder and most workplace schemes | Money in pension pots that goes towards paying you, however you decide to take the money

Defined benefit - some workplace schemes | Usually 20 times the pension you get in the first year plus your lump sum - check with your pension provider

Your pension provider may ask for information about other pension schemes you’re in so they can check if you’re above your lifetime allowance when you:

decide to take money from a pension pot

turn 75

transfer your pension overseas

Pay tax if you go above your lifetime allowance

You’ll get a statement from your pension provider telling you how much tax you owe if you go above your lifetime allowance. Your pension provider will deduct the tax before you start getting your pension.

You’ll need to report the tax deducted by filling in a Self Assessment tax return - download and fill in form SA101 if you’re using paper forms. You’ll get information from your pension provider to help you do this.

If you die before taking your pension HM Revenue and Customs (HMRC) will bill the person who inherits your pension for the tax.

Rates

The rate of tax you pay on pension savings above your lifetime allowance depends on how the money is paid to you - the rate is:

55% if you get it as a lump sum

25% if you get it any other way, for example pension payments or cash withdrawals

Protect your lifetime allowance

The lifetime allowance was reduced in April 2016. You can apply to protect your lifetime allowance from this reduction.

Tell your pension provider the type of protection and the protection reference number when you decide to take money from your pension pot.

Withdrawing cash from a pension pot

You cannot withdraw cash from a defined contribution pension pot (‘uncrystallised funds pension lump sums’) if you have:

primary or enhanced protection covering a lump sum worth more than £375,000

‘lifetime allowance enhancement factor’ if your unused lifetime allowance is less than 25% of the cash you want to withdraw

Reporting changes to HMRC

You can lose enhanced protection or any type of fixed protection if:

you make new savings in a pension scheme

you are enrolled in a new workplace pension scheme

you transfer money between pension schemes in a way that does not meet the transfer rules

you’ve got enhanced protection and, when you take your pension benefits, their value has increased more than the amount allowed in the enhanced protection tax rules - this is called ‘relevant benefit accrual’

you’ve got fixed protection and the value of your pension pot in any tax year grows at a higher rate than is allowed by the tax rules - this is called ‘benefit accrual’

You can report changes online or by post.

Ask your employer whether they’re likely to enrol you in a workplace pension. To make sure you do not lose protection, you can either:

opt out of most schemes within a month

ask not to be enrolled in some schemes - your employer may need evidence of your lifetime allowance protection

Tell HMRC in writing if you think you might have lost your protection.

If you have the right to take your pension before 50

You may have a reduced lifetime allowance if you have the right to take your pension before you’re 50 under a pension scheme you joined before 2006.

This only applies to people in certain jobs (for example professional sports, dance and modelling) who start taking their pension before they’re 55.

Your lifetime allowance is not reduced if you’re in a pension scheme for uniformed services, for example the armed forces, police and fire services.


Tax overpayments and underpayments

Your tax calculation

If you’re employed or get a pension, your employer or pension provider uses your tax code to work out how much tax to take from you.

You could still be paying too much or too little tax. For example, if you got a company benefit or pay rise that HMRC did not know about, and so they did not update your tax code.

If you have not paid the right amount at the end of the tax year, HMRC will send you a P800 or a Simple Assessment tax calculation.

Your P800 or Simple Assessment will tell you how to get a refund or pay tax you owe.

You will not get a P800 or Simple Assessment if you’re registered for Self Assessment. Your bill will be adjusted automatically if you’ve underpaid or overpaid tax.

When you might get a P800

You might get a P800 if you:

finished one job, started a new one and were paid by both in the same month

started receiving a pension at work

received Employment and Support Allowance or Jobseeker’s Allowance

P800s are sent out after the tax year ends on 5 April. You’ll normally get yours by the end of November.

When you might get a Simple Assessment letter

You might get a Simple Assessment letter if you:

owe tax that cannot be automatically taken out of your income

owe HMRC more than £3,000

have to pay tax on the State Pension

You can pay your Simple Assessment bill online.

Checking your tax calculation

Your letter will show the income you should have paid tax on. This includes any income from pay, pensions, state benefits, savings interest and employee benefits.

Compare the figures with your records, for example your P60, bank statements or letters from the Department for Work and Pensions. If your state benefit was paid every 4 weeks, work out the total paid in a year by multiplying your regular payment by 13 (not 12).

You may be able to use the HMRC tax checker to work out how much tax you should have paid.

If you think your tax calculation is wrong

Contact HMRC if you think the amounts used in your letter are wrong, or HMRC did not act on information you gave them.

You have 60 days to query your simple assessment in writing or by telephone. The details of how to do that will be mentioned in your Simple Assesment letter.

If your P800 says you're due a refund

Your P800 tax calculation will tell you how you can get your refund.

If your P800 says you can claim online

Your P800 will tell you if you can claim your refund online. You’ll be sent the money within 5 working days - it’ll be in your UK account once your bank has processed the payment.

If you do not claim within 21 days, HM Revenue and Customs (HMRC) will send you a cheque. You’ll get this within 6 weeks of the date on your P800.

Contact HMRC if you cannot claim your refund online.

If your P800 says you’ll get a cheque

Your P800 will tell you if HMRC will send you a cheque. You do not need to make a claim.

You’ll get your cheque within 14 days of the date on your P800. If you’re owed tax from more than one year, you’ll get a single cheque for the entire amount.

If you do not have a P800

You can check how much Income Tax you should have paid.

Contact HMRC if you think you’ve paid too much tax. If they agree, they’ll send you a P800.

If your P800 says you owe tax

HM Revenue and Customs (HMRC) will usually collect the tax you owe in instalments over the next year. This will happen automatically if you:

pay Income Tax through an employer or pension provider

earn enough income over your Personal Allowance to cover the underpayment

owe less than £3,000

HMRC will write to you about how you can pay if they cannot collect the money this way.

Other ways to pay

Online

Your P800 will tell you if you can pay the tax you owe online.

By post

You can pay with a cheque, made payable to ‘HM Revenue and Customs only’.

Write your National Insurance Number on the back of the cheque. Send it with a covering letter including:

your full name and address

your National Insurance number

the amount of the payment

what the payment relates to, for example, PAYE

the year the payment is for

Allow 3 working days for your payment to reach HMRC. Send your cheque to:

You do not need to include a street name, city name or PO box with this address.


Tax when you get a pension

What’s taxed

You pay tax if your total annual income adds up to more than your Personal Allowance. Find out about your Personal Allowance and Income Tax rates.

Your total income could include:

the State Pension you get (either the basic State Pension or the new State Pension)

Additional State Pension

a private pension (workplace or personal) - you can take some of this tax-free

earnings from employment or self-employment

any taxable benefits you get

any other income, such as money from investments, property or savings

You may have to pay Income Tax at a higher rate if you take a large amount from a private pension. You may also owe extra tax at the end of the tax year.

If your private pensions total more than £1,073,100

You usually pay a tax charge if the total value of your private pensions is more than £1,073,100. Your pension provider will take off the charge before you get your payment.

Tax if someone inherits your pension

Other rules apply if someone inherits your State pension or your private pension.

What's tax-free

You won’t usually pay any tax if your total annual income adds up to less than your Personal Allowance.

Lump sums from your pension

You can usually take up to 25% of the amount built up in any pension as a tax-free lump sum. The tax-free lump sum doesn’t affect your Personal Allowance.

Tax is taken off the remaining amount before you get it.

When you can take your pension depends on your pension’s rules. It’s usually 55 at the earliest.

You might have to pay Income Tax at a higher rate if you take a large amount from your pension. You could also owe extra tax at the end of the tax year.

How you can take your pension

A pension worth up to £10,000

You can usually take any pension worth up to £10,000 in one go. This is called a ‘small pot’ lump sum. If you take this option, 25% is tax-free.

You can usually get:

up to 3 small pot lump sums from different personal pensions

unlimited small pot lump sums from different workplace pensions

A pension worth up to £30,000 that includes a defined benefit pension

If you have £30,000 or less in all of your private pensions, you can usually take everything you have in your defined benefit pension or defined contribution pension as a ‘trivial commutation’ lump sum. If you take this option, 25% is tax-free.

If this lump sum is paid from more than one pension, you must:

have your savings in each scheme valued by the provider on the same day, no more than 3 months before you get the first payment

get all payments within 12 months of the first payment

If you take payments from a pension before taking the rest as a lump sum, you pay tax on the whole lump sum.

Cash from a defined contribution pension

Check with your provider about how you can take money from a defined contribution pension. You can take:

all the money built up in your pension as cash - up to 25% is tax-free

smaller cash sums from your pension - up to 25% of each sum is tax-free

You may have to pay a tax charge on money you put into your pension after you withdraw cash.

If your life expectancy is less than a year

You may be able to take all the money in your pension as a tax-free lump sum, if all of the following apply:

you’re expected to live less than a year because of serious illness

you’re under 75

you don’t have more than the lifetime allowance of £1,073,100 in pension savings

If you’re over 75 you’ll pay Income Tax on the lump sum.

Check with your pension provider. Some pension funds will keep at least 50% of your pension for your spouse or civil partner.

How your tax is paid

If you get the State Pension and a private pension

Your pension provider will take off any tax you owe before they pay you. They’ll also take off any tax you owe on your State Pension.

If you get payments from more than one provider (for example, from a workplace pension and a personal pension), HM Revenue and Customs (HMRC) will ask one of your providers to take the tax off your State Pension.

At the end of the tax year you’ll get a P60 from your pension provider showing how much tax you’ve paid.

If the State Pension is your only income

You’re responsible for paying any tax you owe. Fill in and send a Self Assessment tax return if you owe anything.

If you started getting your pension on or after 6 April 2016, don’t send a tax return. HMRC will write to tell you what you owe and how to pay.

If you continue to work

Your employer will take any tax due off your earnings and your State Pension. This is called Pay As You Earn (PAYE).

If you’re self-employed you must fill in a Self Assessment tax return at the end of the tax year. You must declare your overall income, including the State Pension and money from private pensions, for example your workplace pension.

If you have other income

You’re responsible for paying any tax you owe on income other than money from your pensions. You might have to fill in a Self Assessment tax return.

You can claim a tax refund if you’ve paid too much tax.

Tax codes

If your income only comes from one source you’ll usually have one tax code.

You can have several tax codes if you have income from more than one source.

You can get your tax code corrected if you think it’s wrong.

Tax when you live abroad

If you live abroad but are classed as a UK resident for tax purposes, you may have to pay UK tax on your pension. The amount you pay depends on your income.

If you’re not a UK resident, you don’t usually pay UK tax on your pension. But you might have to pay tax in the country you live in. There are a few exceptions - for example, UK civil service pensions will always be taxed in the UK.

Double tax

If you live in a country without a ‘double taxation agreement’ with the UK, you might have to pay tax in both countries.

Higher tax on unauthorised payments

You’ll pay up to 55% tax on payments from your pension provider if they make an ‘unauthorised payment’. This is a payment made outside of the government’s tax rules and usually includes:

any payments before you’re 55 (there are exceptions)

a ‘trivial commutation’ lump sum of over £30,000

regular payments into your account after you’ve died

Some companies advertise personal loans or cash advances if you take your pension early. These payments are unauthorised and you have to pay tax on them.


National Insurance

Overview

You pay National Insurance contributions to qualify for certain benefits and the State Pension.

You pay mandatory National Insurance if you’re 16 or over and are either:

an employee earning above £184 a week

self-employed and making a profit of £6,515 or more a year

You may be able to pay voluntary contributions to avoid gaps in your NI contributions.

You need a National Insurance number before you can start paying National Insurance contributions.

If you earn between £120 and £184 a week, your contributions are treated as having been paid to protect your National Insurance record.

This page is also available in Welsh (Cymraeg).

National Insurance classes

There are different types of National Insurance (known as ‘classes’).

The type you pay depends on your employment status and how much you earn.

When you stop paying

If you’re employed, you stop paying Class 1 National Insurance when you reach the State Pension age.

If you’re self-employed you stop paying:

Class 2 National Insurance when you reach State Pension age

Class 4 National Insurance from 6 April (start of the tax year) after you reach State Pension age

Your National Insurance number

You have a National Insurance number to make sure your National Insurance contributions and tax are recorded against your name only.

It’s made up of letters and numbers and never changes.

You can find your National Insurance number:

on your payslip

on your P60

on letters about your tax, pension or benefits

in the National Insurance section of your personal tax account

You can apply for a National Insurance number if you do not have one or find your National Insurance number if you’ve lost it.

Who uses your National Insurance number

These organisations need to know what your number is:

HM Revenue and Customs (HMRC)

your employer

the Department for Work and Pensions (which includes Jobcentre Plus and the Pension, Disability and Carers Service), if you claim state benefits, or in Northern Ireland the Department for Social Development

your local council, if you claim Housing Benefit, or the Northern Ireland Housing Executive

Electoral Registration Officers (to check your identity when you register to vote)

the Student Loan Company, if you apply for a student loan

your pension provider if you have a personal or stakeholder pension

your Individual Savings Account (ISA) provider, if you open an ISA

authorised financial service providers who help you buy and sell investments like shares, bonds and derivatives - you can check if your provider is authorised

To prevent identity fraud, keep your National Insurance number safe. Do not share it with anyone who does not need it.

Proving your National Insurance number

You can save or print a letter confirming your National Insurance number from your personal tax account.

If you do not have a personal tax account, contact HMRC to ask for a letter.

National Insurance classes

The class you pay depends on your employment status and how much you earn.

National Insurance class | Who pays

Class 1 | Employees earning more than £184 a week and under State Pension age - they’re automatically deducted by your employer

Class 1A or 1B | Employers pay these directly on their employee’s expenses or benefits

Class 2 | Self-employed people earning profits of £6,515 or more a year. If you’re earning less than this, you can choose to pay voluntary contributions to fill or avoid gaps in your National Insurance record

Class 3 | Voluntary contributions - you can pay them to fill or avoid gaps in your National Insurance record

Class 4 | Self-employed people earning profits of £9,569 or more a year

See the current rates for Class 1, 2 and 4 contributions.

How much you pay

The amount of National Insurance you pay depends on your employment status and how much you earn.

You can see rates for past tax years.

If you’re employed

You pay Class 1 National Insurance contributions. The rates for most people for the 2021 to 2022 tax year are:

Your pay | Class 1 National Insurance rate

£184 to £967 a week (£797 to £4,189 a month) | 12%

Over £967 a week (£4,189 a month) | 2%

You’ll pay less if:

you’re a married woman or widow with a valid ‘certificate of election’

you’re deferring National Insurance because you’ve got more than one job

Employers pay a different rate of National Insurance depending on their employees’ category letters.

How to pay

You pay National Insurance with your tax. Your employer will take it from your wages before you get paid. Your payslip will show your contributions.

If you’re a director of a limited company, you may also be your own employee and pay Class 1 National Insurance through your PAYE payroll.

If you’re self-employed

You pay Class 2 and Class 4 National Insurance, depending on your profits. Most people pay both through Self Assessment.

You may be able to pay voluntary contributions to avoid gaps in your national insurance record if you:

have profits of less than £6,515 a year from your self-employment

have a specific job (such as an examiner or business owner in property or land) and you do not pay Class 2 National Insurance through Self Assessment

If you have a specific job and you do not pay Class 2 National Insurance through Self Assessment, you need to contact HMRC to arrange a voluntary payment.

If you’re employed and self-employed

You might be an employee but also do self-employed work. In this case your employer will deduct your Class 1 National Insurance from your wages, and you may have to pay Class 2 and 4 National Insurance for your self-employed work.

How much you pay depends on your combined wages and your self-employed work. HM Revenue and Customs (HMRC) will let you know how much National Insurance is due after you’ve filed your Self Assessment tax return.

Directors, landlords and share fishermen

There are different National Insurance rules for:

company directors

landlords running a property business

share fishermen for example you’re working on a British fishing boat but not under a contract of service

You can apply to HMRC to check your National Insurance record and claim a refund if you think you’ve overpaid.

What National Insurance is for

National Insurance contributions count towards the benefits and pensions in the table.

| Class 1: employees | Class 2: self-employed | Class 3: voluntary contributions

Basic State Pension | Yes | Yes | Yes

Additional State Pension | Yes | No | No

New State Pension | Yes | Yes | Yes

Contribution-based Jobseeker’s Allowance | Yes | No | No

Contribution-based Employment and Support Allowance | Yes | Yes | No

Maternity Allowance | Yes | Yes | No

Bereavement Support Payment | Yes | Yes | No

Class 4 contributions paid by self-employed people with a profit of £9,569 or more do not usually count towards state benefits.

Help if you're not working

Your benefits could be affected if there are gaps in your National Insurance record. National Insurance credits can help to avoid gaps in your record and protect your benefits.

You can get credits if you cannot pay National Insurance contributions, for example, if:

you’re unable to work due to illness

you’re caring for someone

If you’re not working or getting credits you can also top up your National Insurance with voluntary contributions.

Change of circumstance

You must tell HM Revenue and Customs (HMRC) if you:

change your personal details, for example your name, address or marital status

start being self-employed

stop being self-employed


Pay Class 2 National Insurance if you do not pay through Self Assessment

Overview

You make Class 2 National Insurance contributions if you’re self-employed to qualify for benefits like the State Pension.

Most people pay the contributions as part of their Self Assessment tax bill.

You cannot currently pay by cheque through the post because of coronavirus (COVID-19).

If you do not pay through Self Assessment

You do not pay through Self Assessment if you’re any of the following:

an examiner, moderator, invigilator or person who set exam questions

running a businesses involving land or property

a minister of religion who does not receive a salary or stipend

living abroad and paying voluntary Class 2 contributions

a person who makes investments - but not as a business and without getting a fee or commission

a non-UK resident who’s self-employed in the UK

working abroad

HM Revenue and Customs (HMRC) will send you a payment request by the end of October - call the newly self-employed helpline if you do not get one.

Pay now

You can no longer pay at the Post Office.

How long it takes

Make sure your payment reaches HMRC by the deadline. The time you need to allow depends on how you pay.

You can make same or next day payments:

by online or telephone banking (Faster Payments)

by CHAPS

at your bank or building society, if it’s still open

You can pay within 3 days by BACS.

You can pay within 21 working days by Direct Debit if you have not set one up before.

If the deadline falls on a weekend or bank holiday, make sure your payment reaches HMRC on the last working day before it (unless you’re paying by Faster Payments).

If you miss the deadline

You might have to pay more to fill the gap in your National Insurance record. HMRC will write to you to tell you how much you need to pay.

Bank details for online or telephone banking, CHAPS, Bacs

Paying from the UK

Use your online or telephone banking account to make your payment to the following HM Revenue and Customs’ (HMRC) bank account.

Sort code | Account number | Account name

08 32 20 | 12001004 | HMRC NICO

Reference number

Use the 18-digit reference number shown on your HMRC payment request, when you make a payment. Do not leave any spaces between the digits.

If you do not have an 18-digit reference number you can get help from the National Insurance Helpline.

Your payment may be delayed if you use the wrong reference number.

How long it takes

Payments made by Faster Payments (online or telephone banking) will usually reach HM Revenue and Customs (HMRC) on the same or next day, including weekends and bank holidays.

CHAPS payments usually reach HMRC the same working day if you pay within your bank’s processing times.

Bacs payments usually take 3 working days.

Check your bank’s transaction limits and processing times before making a payment.

Overseas payments

If you’re paying from abroad, the account you pay into depends on whether you’re using a UK or non-UK account.

Account type | Sort code | Account number

UK | 20 20 48 | 30944793

Account type | Account number (IBAN) | Bank Identifier Code (BIC)

Non-UK | GB49BARC20204830944793 | BARCGB22

For either account, pay to account name ‘HMRC NIC receipts’.

Reference number

Use your National Insurance number followed by ‘IC’, your surname then your initial. If your bank limits you to a certain amount of characters, you should use your National Insurance number followed by ‘IC’ and as much of your surname as possible.

If you’re an employer paying for an employee living abroad, you should use your 13-character employer number.

Banking address

HMRC’s banking address is:

At your bank or building society

Pay at a branch by cash or cheque, along with your HM Revenue and Customs (HMRC) payslip.

Some branches might be closed because of coronavirus (COVID-19).

You’ll find your payslip on the payment request HMRC sent you.

Make your cheque payable to ‘HM Revenue and Customs only’.

Write your Class 2 National Insurance reference number on the back of your cheque. You’ll find the reference number on the payslip or the payment request sent to you by HMRC.

If you pay between Monday and Friday, HMRC will accept your payment on the date you make it, and not the date it reaches HMRC’s account.

By cheque through the post

You can still make payments:

by online or telephone banking

by CHAPS or BACS

If you’ve paid by cheque since 6 April 2020

Call HMRC if you want to check your payment has been received.

Direct Debit

Fill in the form to set up a new Direct Debit.

If you live abroad and pay voluntary National Insurance, fill in the form at the end of leaflet NI38 instead.

Allow 21 days to set up a new Direct Debit.

HM Revenue and Customs (HMRC) will send you a letter telling you when payments will be taken and how much they will be.

Payments will appear on your statement as ‘HMRC NI-DD’. HMRC will write to you if your payments change for any reason.

If you have a question about your Direct Debit payments contact National Insurance enquiries.


Pay voluntary Class 3 National Insurance

Overview

You may be able to pay Class 3 voluntary National Insurance to fill gaps in your contributions record to qualify for benefits like the State Pension.

Pay now

Before you pay

Check your National Insurance record to find out:

if you have any gaps

if you’re eligible to pay voluntary contributions

how much it will cost

Voluntary contributions do not always increase your State Pension. Contact the Future Pension Centre to find out if you’ll benefit from voluntary contributions.

Ways to pay

You can pay monthly via Direct Debit.

Contact HM Revenue and Customs (HMRC) if you want to:

pay quarterly - they’ll send you a bill every July, October, January and April

make a one-off payment

Make sure you pay HMRC by the deadline you’re given. The amount of time you’ll need to allow depends on how you pay.

Same or next day

You can make same or next day payments:

by online or telephone banking

by CHAPS

3 working days

You can pay within 3 days by BACS.

You currently cannot pay by cheque through the post because of coronavirus (COVID-19).

You can no longer pay at the Post Office.

Direct Debit

To set up monthly payments, download and send the Direct Debit form to HM Revenue and Customs (HMRC). The address is on the form.

HMRC will write within 21 days to confirm your Direct Debit is set up.

Payments appear on your statement as ‘HMRC NI-DD’.

Your debits usually start in May.  If you’re setting up the Direct Debit after May and you need to pay arrears, you can do this through your first payment.

Bank details for online or telephone banking, CHAPS, Bacs

Make your payment to the following HM Revenue and Customs’ (HMRC) bank account, unless you’re paying from overseas.

Sort code | Account number | Account name

08 32 20 | 12001004 | HMRC NICO Telephone banking

Reference number

Use your reference number when making your payment. You’ll find it on your bill.

For quarterly payments, your number will be 18 characters beginning with 11.

For one-off payments, your number will be 18 characters beginning with 60.

Contact HMRC if you do not have a reference number.

How long it takes

Payments by Faster Payments (online or telephone banking) usually reach HM Revenue and Customs (HMRC) on the same or next day, including weekends and bank holidays.

CHAPS payments usually reach HMRC the same working day if you pay within your bank’s processing times.

Bacs payments usually take 3 working days.

Check your bank’s transaction limits and processing times before making a payment.

Overseas payments

If you’re paying from abroad, the account you pay into depends on whether you’re using a UK or non-UK account.

Account type | Sort code | Account number

UK | 20 20 48 | 30944793

Account type | Account number (IBAN) | Bank Identifier Code (BIC)

Non-UK | GB49BARC20204830944793 | BARCGB22

For either account, pay to account name ‘HMRC NIC receipts’.

Reference number

Use your National Insurance number followed by ‘IC’, your surname then your initial. If your bank limits you to a certain amount of characters, you should use your National Insurance number followed by ‘IC’ and as much of your surname as possible.

If you’re an employer paying for an employee living abroad, you should use your 13-character employer number.

Banking address

HMRC’s banking address is:

At your bank or building society

Pay at a branch by cash or cheque. You’ll need the payslip HM Revenue and Customs (HMRC) sent with your bill.

Some branches might be closed because of coronavirus (COVID-19).

Make your cheque payable to ‘HM Revenue and Customs only’.

Write your Class 3 National Insurance reference number on the back of your cheque. You’ll find the reference number on the payslip provided by HMRC.

HMRC will accept your payment on the date you make it, and not the date it reaches HMRC’s account, if you pay between Monday and Friday.

By cheque through the post

You cannot currently pay by cheque through the post because of coronavirus (COVID-19).

You can still make payments:

by online or telephone banking

by CHAPS or BACS

at your bank or building society, if it’s still open

If you’ve paid by cheque since 6 April 2020

Call HMRC if you want to check your payment has been received.


Voluntary National Insurance

Gaps in your National Insurance record

You may get gaps in your record if you do not pay National Insurance or do not get National Insurance credits. This could be because you were:

employed but had low earnings

unemployed and were not claiming benefits

self-employed but did not pay contributions because of small profits

living abroad

Gaps can mean you will not have enough years of National Insurance contributions to get the full State Pension (sometimes called ‘qualifying years’).

You may be able to pay voluntary contributions to fill any gaps if you’re eligible.

Check your record for gaps

Check your National Insurance record to find out:

if you have any gaps

if you’re eligible to pay voluntary contributions

how much it will cost

You may also be eligible for National Insurance credits if you claim benefits because you cannot work, are unemployed or caring for someone full time.

Contact HM Revenue and Customs (HMRC) if you think your National Insurance record is wrong.

Decide if you want to pay voluntary contributions

Voluntary contributions do not always increase your State Pension. Contact the Future Pension Centre to find out if you’ll benefit from voluntary contributions.

You may also want to get financial advice before you decide to make voluntary contributions.

Why you might want to pay voluntary contributions

You may want to pay voluntary contributions because:

you’re close to State Pension age and do not have enough qualifying years to get the full State Pension

you know you will not be able to get the qualifying years you need to get the full State Pension during your working life

you’re self-employed and do not have to pay Class 2 contributions because you have low profits

you live outside the UK, but you want to qualify for some benefits

Self-employed people with specific jobs

Some people do not pay Class 2 contributions through Self Assessment, but may want to pay voluntary contributions. These are:

examiners, moderators, invigilators and people who set exam questions

people who run businesses involving land or property

ministers of religion who do not receive a salary or stipend

people who make investments for themselves or others - but not as a business and without getting a fee or commission

Eligibility

You must be eligible to pay voluntary National Insurance contributions for the time that the contributions cover.

You can usually only pay for gaps in your National Insurance record from the past 6 years.

You can sometimes pay for gaps from more than 6 years ago depending on your age.

Who can pay voluntary contributions

These tables explain who’s eligible to pay Class 2 or Class 3 contributions.

Your situation | Which class to pay

Employed but earning under £120 a week and not eligible for National Insurance credits | Class 3

Self-employed with profits under £6,515 | Class 2 or Class 3 - they count towards different benefits

Both employed and self-employed, with low earnings and small profits | Contact HM Revenue and Customs (HMRC) to check if you have a gap and how much you need to pay

Self-employed as an examiner, minister of religion or in an investment or land and property business | Class 2 or Class 3 - they count towards different benefits

Living and working abroad | Class 2 - but only if you worked in the UK immediately before leaving, and you’ve previously lived in the UK for at least 3 years in a row or paid at least 3 years of contributions

Living abroad but not working | Class 3 - but only if at some point you’ve lived in the UK for at least 3 years in a row or paid at least 3 years of contributions

Unemployed and not claiming benefits | Class 3

Married woman or widow who stopped paying reduced rates | Class 3

You cannot pay voluntary contributions if:

you’re eligible for National Insurance credits

you’re a married woman or widow paying reduced rates

If you’re over State Pension age

Your situation | Which class to pay

You’ve reached State Pension age and want to fill in gaps in your National Insurance record | Class 3

Rates

The rates for the 2021 to 2022 tax year are:

£3.05 a week for Class 2

£15.40 a week for Class 3

You usually pay the current rate when you make a voluntary contribution.

If you’re a man born after 5 April 1951 or a woman born after 5 April 1953

You can pay voluntary contributions by 5 April 2023 to make up for gaps between 6 April 2006 and 5 April 2016.

You’ll pay the current rate.

When you pay different rates

If you’re paying Class 2 contributions for the previous tax year or Class 3 contributions for the previous 2 tax years, you pay the original rate for those tax years.

Call HM Revenue and Customs (HMRC) if you have questions about voluntary National Insurance.

How and when to pay

Find out how to:

pay Class 2 voluntary contributions

pay Class 3 voluntary contributions

If you’re living abroad, read leaflet NI38 and fill in form CF83 (found at the end). Send it back to HMRC using the address on the form.

Deadlines

You can usually pay voluntary contributions for the past 6 years. The deadline is 5 April each year.

You can sometimes pay for gaps from more than 6 years ago, depending on your age.

You’re a man born after 5 April 1951 or a woman born after 5 April 1953

You have until 5 April 2023 to pay voluntary contributions to make up for gaps between April 2006 and April 2016.


Work in an EU country

Overview

You’ll need a work permit to work in most EU countries if you’re a UK citizen.

In most cases, you’ll need a job offer from your chosen country so that you can get a visa to move there.

Check with the UK-based embassy of the country you want to work in to see what you need to do.

If you want to work in an EU country, check the country’s living in guide for updates.

If you moved to the EU before 1 January 2021

If you were legally living in an EU country before 1 January 2021, your right to work will be protected as long as you carry on living there. This is because you are covered by the Withdrawal Agreement.

You’re also protected by the Withdrawal Agreement if you started working in one EU country and living in a different EU country or the UK, before 1 January 2021.

You’ll have the same rights as nationals of the country you’re working in when it comes to working conditions, pay and social security (for example, benefits).

Healthcare and insurance

You can use a European Health Insurance Card (EHIC) or UK Global Health Insurance Card (GHIC) if you’re working in an EU country for up to 3 months. Your EHIC or GHIC gives you access to free or cheaper state-provided medical treatment.

Some UK-issued EHICs may no longer be valid in Switzerland, Norway, Iceland or Liechtenstein.

Find out more about the EHIC and GHIC, including who can get them, where they’re valid and how to apply.

If you’re planning to work in an EEA country or Switzerland for longer, you may need to:

register as a resident and pay social security contributions to use the state healthcare system in that country

take out private health insurance

Each country’s healthcare system is different and you may have to pay for treatment you’d get for free on the NHS.

Find out more in the country healthcare guides.

You usually have to pay for any medical treatment outside of the EEA, but you can get free or reduced cost treatment in some other countries.

Working abroad for a UK employer

If you are sent to work abroad temporarily, your employer must follow some of the employment rules of the country you’re sent to work in.

Find out about the employment rules for a country by contacting its UK-based embassy.

You can also read guidance for business travellers visiting Europe.

Tax

You might still have to pay UK Income Tax, depending on what your ‘residency status’ will be in the country you’re going to (for example, if you’ll be a temporary or permanent resident).

Fill in form P85 to tell HM Revenue and Customs (HMRC) that you’ve left or are about to leave the UK to live or work abroad. Fill in the form and send it to HMRC.

HMRC will tell you how your tax will be affected.

National Insurance

You might be able to pay National Insurance while you’re working abroad, depending on where you’re working and how long for.

If you’re eligible, you can keep paying National Insurance to protect your State Pension and entitlement to other benefits.

Your circumstances change

Contact HMRC if your circumstances change when you’re abroad, for example if you move house or your marital status changes. You’ll need your National Insurance number.


Business records if you're self-employed

Overview

You must keep records of your business income and expenses for your tax return if you’re self-employed as a:

sole trader

partner in a business partnership

You’ll also need to keep records of your personal income.

If you’re the nominated partner in a partnership, you must also keep records for the partnership.

There are different rules on keeping records for limited companies.

Accounting methods

You’ll need to choose an accounting method.

Traditional accounting

Many businesses use traditional accounting where you record income and expenses by the date you invoiced or were billed.

Cash basis accounting

Most small businesses with an income of £150,000 or less can use cash basis reporting.

With this method, you only record income or expenses when you receive money or pay a bill. This means you will not need to pay Income Tax on money you have not yet received in your accounting period.

What records to keep

You’ll need to keep records of:

all sales and income

all business expenses

VAT records if you’re registered for VAT

PAYE records if you employ people

records about your personal income

your grant, if you claimed through the Self-Employment Income Support Scheme because of coronavirus

Why you keep records

You do not need to send your records in when you submit your tax return but you need to keep them so you can:

work out your profit or loss for your tax return

show them to HM Revenue and Customs (HMRC) if asked

You must make sure your records are accurate.

Keep proof

Types of proof include:

all receipts for goods and stock

bank statements, chequebook stubs

sales invoices, till rolls and bank slips

If you’re using traditional accounting

As well as the standard records, you’ll also need to keep further records so that your tax return includes:

what you’re owed but have not received yet

what you’ve committed to spend but have not paid out yet, for example you’ve received an invoice but have not paid it yet

the value of stock and work in progress at the end of your accounting period

your year end bank balances

how much you’ve invested in the business in the year

how much money you’ve taken out for your own use

How long to keep your records

You must keep your records for at least 5 years after the 31 January submission deadline of the relevant tax year. HM Revenue and Customs (HMRC) may check your records to make sure you’re paying the right amount of tax.

Very late returns

If you send your tax return more than 4 years after the deadline, you’ll need to keep your records for 15 months after you send your tax return.

If your records are lost, stolen or destroyed

If you cannot replace your records, you must do your best to provide figures. Tell HMRC when you file your tax return if you’re using:

estimated figures - your best guess when you cannot provide the actual figures

provisional figures - your temporary estimated figures while you wait for actual figures (you’ll also need to submit actual figures when available)


Keeping your pay and tax records

Overview

You need to keep records if you have to send HM Revenue and Customs (HMRC) a Self Assessment tax return.

You’ll need your records to fill in your tax return correctly. If HMRC checks your tax return, they may ask for the documents.

You must also keep records for business income and outgoings if you’re self-employed.

How to keep your records

There are no rules on how you must keep records. You can keep them on paper, digitally or as part of a software program (like book-keeping software).

HMRC can charge you a penalty if your records are not accurate, complete and readable.

Lost or destroyed records

Try to get copies of as much as you can, for example ask banks for copies of statements, suppliers for duplicate invoice etc.

You can use ‘provisional’ or ‘estimated’ figures if you cannot recreate all your records. You must use the ‘Any other information’ box on the tax return to say that this is what you’re doing.

‘Provisional’ means you’ll be able to get paperwork to confirm your figures later. ‘Estimated’ means you will not be able to confirm the figures.

You may have to pay interest and penalties if your figures turn out to be wrong and you have not paid enough tax.

How long to keep your records

You must keep records about your business income and costs for longer if you’re self-employed.

How long you should keep your records depends on whether you send your tax return before or after the deadline.

HM Revenue and Customs (HMRC) may check your records to make sure you’re paying the right amount of tax.

Tax returns sent on or before the deadline

You should keep your records for at least 22 months after the end of the tax year the tax return is for.

Tax returns sent after the deadline

You should keep your records for at least 15 months after you sent the tax return.

Employees and limited company directors

Income from employment

You should keep documents about your pay and tax, including:

your P45 - if you leave your job, this shows your pay and tax to the date you left

your P60 - if you’re in a job on 5 April, this shows your pay and tax for the tax year

form P11D - this shows your expenses and benefits, like a company car or health insurance

certificates for any Taxed Award Schemes

information about any redundancy or termination payment

Contact your employer if you do not have your P60, P45 or form P11D.

You should also keep details of any other income or benefits from your job, including:

any tips received (unless your employer pays them through the ‘tronc’ system, which means they will have deducted tax already)

benefits you get in connection with your job from someone other than your employer, like meal vouchers

any lump sum payments not included on your P60 or P45, like incentive payments or ‘golden hellos’ (payments you get to encourage you to take a new job)

Expense records

If you’ve had to pay for things like tools, travel or specialist clothing for work, you may be able to claim for these to reduce the tax you’ll have to pay. You need to keep a record of these so you can include them in your tax return.

Benefits records

You should keep any documents relating to:

social security benefits

Statutory Sick Pay

Statutory Maternity, Paternity or Adoption Pay

Jobseeker’s Allowance

Income from employee share schemes or share-related benefits

You should keep:

copies of share option certificates and exercise notices

letters about any changes to your options

information about what you paid for your shares and the relevant dates

details of any benefits you’ve received as an employee shareholder

Savings, investments and pensions

You should keep all:

bank or building society statements and passbooks

statements of interest and income from your savings and investments

tax deduction certificates from your bank

dividend vouchers you get from UK companies

unit trust tax vouchers

documents that show the profits you’ve made from life insurance policies (called ‘chargeable event certificates’)

details of income you get from a trust

details of any out-of-the ordinary income you’ve received, like an inheritance

Pension information

You should keep:

form P160 (Part 1A) which you got when your pension started

form P60 which your pension provider sends you every year

any other details of a pension (including State Pension) and the tax deducted from it

Rental income

You should keep details of:

the dates when you let out your property

all rent you get

any income from services you give to tenants (for example if you charge for maintenance or repairs)

rent books, receipts, invoices and bank statements

allowable expenses you pay to run your property (for example services you pay for such as cleaning or gardening)

There are rules about what you can and cannot claim as expenses on your tax return.

Capital gains or losses

You may have to pay Capital Gains Tax if you sell (or ‘dispose of’) certain assets that have gone up in value since you got them.

You must make sure you keep the correct records.

Overseas income

You should keep:

evidence of income you’ve earned from overseas, like payslips, bank statements or payment confirmations

receipts for any overseas expenses you want to claim to reduce your tax bill

dividend certificates from overseas companies

certificates or other proof of the tax you’ve already paid - either in the UK or overseas


Register for Self Assessment

Overview

You must register for Self Assessment if you have to send a tax return and did not send one last year.

There are different ways to register if you’re:

self-employed

not self-employed

registering a partner or partnership

Register if you’re self-employed

If you have to send a tax return and did not send one last year, you need to register for Self Assessment and Class 2 National Insurance.

Register by 5 October in your business’s second tax year. You could be fined if you do not.

If you have not filed a return online before

Register online. Once you’ve completed the questions, HMRC will create your account.

You’ll receive a letter with your Unique Taxpayer Reference (UTR) number within 10 days (21 if you’re abroad). You’ll need your UTR to file a return.

You’ll then receive another letter with an activation code for your account. You can get a new activation code if you do not receive it or you lose it.

Once you’ve activated your account, you can file your tax return any time before the deadline.

If you’ve filed a return online before

Re-register online (form CWF1) if the work you plan to do is different from what you did before.

You’ll need your 10-digit Unique Taxpayer Reference (UTR) from when you registered before. You can find your UTR if you do not know it.

You’ll receive a letter with a new account activation code 10 days later (21 if you’re abroad).

Once you’ve reactivated your account, you can file your tax return any time before the deadline.

If the work you plan to do is the same as you did before, sign in to your account.

If you’ve filed before but you did not use the online service

Create an account for the online service using your UTR. You can find your UTR if you do not know it.

You’ll receive a letter with an activation code for your account.

Other ways to register

You can fill in this form on-screen then print off and post to HMRC. You’ll need to have all your information ready as you cannot save a partly completed form.

If you’re using an older browser, for example Internet Explorer 8, you’ll need to update it or use a different browser. Find out more about browsers.

Register if you're not self-employed

If you have to send a tax return and did not send one last year, you need to register for Self Assessment by 5 October.

If you have not filed online before

Register using form SA1.

After you register, you’ll receive your Unique Taxpayer Reference (UTR) number in the post within 10 working days (21 if you’re abroad).

Create your online account.

Sign up for Self Assessment online - you’ll need your UTR to do this.

You’ll get an activation code for your new account in the post within 7 working days of signing up (21 if you’re abroad). When you get the code, sign in to send your return.

You can replace an activation code if you do not receive it or you lose it.

Once you’ve activated your account, you can file your tax return any time.

If you’ve filed online before

Sign in to your existing account.

Register if you're a partner or partnership

You must register for Self Assessment by 5 October if you’re a partner in a partnership.

You’ll need your partnership’s 10-digit Unique Taxpayer Reference (UTR). You can find a UTR if you’ve lost it.

You must also register your partnership if you’re the ‘nominated partner’.

There are different ways to register:

for limited liability partnerships

if you’re a partner that’s not an individual, for example a company or trust


Building a new home and VAT

Overview

You can apply for a VAT refund on building materials and services if you’re:

building a new home

converting a property into a home

building a non-profit communal residence - eg a hospice

building a property for a charity

The building work and materials have to qualify and you must apply to HM Revenue and Customs (HMRC) within 3 months of completing the work.

There is a separate guide to VAT if you’re working in the construction industry.

Eligibility

The application form has guidance on what building projects and materials qualify for a VAT refund. The basics are listed below.

New homes

The home must:

be separate and self-contained

be for you or your family to live or holiday in

not be for business purposes (you can use one room as a work from home office)

Builders working on new buildings should be zero-rated anyway and you won’t pay any VAT on their services.

Conversions

The building being converted must usually be a non-residential building. Residential buildings qualify if they haven’t been lived in for at least 10 years.

You may claim a refund for builders’ work on a conversion of non-residential building into a home.

For other conversions builders can charge a reduced VAT rate.

Communal and charity buildings

You may get a VAT refund if the building is for one of the following purposes:

non-business - you can’t charge a fee for the use of the building

charitable, for example a hospice

residential, for example a children’s home

Building materials

You may claim a VAT refund for building materials that are incorporated into the building and can’t be removed without tools or damaging the building.

What doesn’t qualify

You can’t get a VAT refund for:

building projects in the Channel Islands

materials or services that don’t have any VAT - for example, they were zero-rated or exempt

professional or supervisory fees - for example, architects or surveyors

hiring machinery or equipment

buildings for business purposes

buildings that can’t be sold or used separately from another property because of a planning permission condition

building materials that aren’t permanently attached to or part of the building itself

fitted furniture, some electrical and gas appliances, carpets or garden ornaments

How to claim

Fill in form 431NB to claim a VAT refund on a new build, or 431C to claim for a conversion.

Send your claim form to HM Revenue and Customs (HMRC).

You must claim within 3 months of the building work being completed.

What you need to include

You must include all the documents listed in the claim form as part of your application.

If an invoice is in your business’s name, you’ll need proof that you’ve refunded the amount from your personal bank - for example, a bank statement.

VAT invoices must be valid and show the correct rate of VAT or they will not be accepted. For invoices not in sterling, convert the amounts into sterling.

How long it takes

HMRC will write to you about when you can expect your VAT refund if your claim is successful. They will usually write to you within 6 weeks.

Help with VAT for building materials

Contact HMRC if you have further questions.


Tax on shopping and services

VAT and duties

VAT is a tax you pay on most goods and services.

Rate | % of VAT | What the rate applies to

Standard | 20% | Most goods and services

Reduced rate | 5% | Some goods and services, for example children’s car seats and some energy-saving materials in the home

Zero rate | 0% | Zero-rated goods and services, for example most food and children’s clothes

Check the VAT rates on different goods and services. Some things are exempt from VAT, such as postage stamps and some financial and property transactions.

VAT is normally included in the price you see in shops, but there are some exceptions.

VAT and disabled people

You do not have to pay VAT on certain goods and services if they’re just for your own use and you’re disabled or have a long-term illness.

Other taxes and duties

You pay different taxes on:

alcohol and tobacco

petrol, diesel and other fuel

insurance

goods from abroad if you go over your customs allowance

Airlines have to pay air passenger duty for every flight from the UK. Most airline tickets include a separate charge to cover this cost.

Gambling operators (for example, betting shops and websites, casinos or slot machine owners) have to pay gambling duties on profits they make from gambling. Customers do not pay duty on their stake (what they bet or pay to play) or winnings.

Where you see VAT

In shops

Any VAT due is already included in the price of something you buy in a shop. No tax is added when you pay.

Some shops in Northern Ireland offer tax-free shopping for visitors.

In adverts, catalogues and price lists

This depends on who they’re aimed at. If they’re for:

the general public only, they’ll show you a price including VAT

businesses as well as consumers, they might show the price with VAT and without

businesses only they do not usually include VAT, which is charged on top of the price shown

On bills and receipts

Sometimes VAT is shown on a separate line. This does not mean you’re paying extra - it just shows how much tax is included in the price.

Invoices from suppliers like builders, painters and decorators must show a separate amount for VAT and their VAT registration number.

How VAT is worked out

When someone charges you VAT they multiply their selling price by the VAT rate to calculate the amount of VAT to charge.

They then add this to the selling price to give you the price you actually pay - this is called the ‘gross’ price.

VAT on energy-saving products

If you’re eligible, you’ll pay a reduced rate of VAT (5%) when certain energy-saving products are installed in your home.

Your supplier will charge you the reduced rate on the installation and any extra work that’s part of it.

Not all products or installations qualify for the reduced rate and you cannot buy or install them yourself.

Eligibility

To qualify for the reduced rate, you must be over 60 or getting one or more of the following:

Child Tax Credit (but not the family element)

Council Tax Benefit

Disability Living Allowance

Personal Independence Payment

a disablement pension

Housing Benefit

Jobseeker’s Allowance (income-based)

Income Support

War Disablement Pension

Working Tax Credit

You will also be eligible to get the reduced rate on the products if the total cost of them (not including VAT) is not over 60% of the cost of the installation of the products (not including VAT).

If your products cost more than 60% of the installation, you’ll only be entitled to the reduced rate on the installation.

Your supplier will be responsible for charging you the correct rate of VAT.

Energy products that qualify

You pay the reduced rate of 5% for:

controls for central heating and hot water systems

draught stripping, for example insulation fixed around windows and doors to reduce draughts

insulation on walls, floors, ceilings and lofts

solar panels

ground-source heat pumps

air-source heat pumps

micro combined heat and power units

wood-fuelled boilers

Central heating systems

You pay the reduced rate of 5% for work funded through energy efficiency grants on the:

installation of heating appliances

installation, repair and maintenance of central heating systems

installation, repair and maintenance of renewable source heating systems

The reduced rate is only for the grant-funded part of the work.

Energy products that do not qualify

You pay the standard rate of VAT for:

heating appliances or systems - unless you get an energy efficiency grant

energy efficient boilers

secondary or double glazing

low emission glass

energy efficient fridge freezers

wind turbines

water turbines

VAT on mobility aids

If you’re over 60, you pay a reduced rate of VAT (5%) on certain mobility aids when you pay for them to be supplied and installed in your home.

Qualifying products

You can get the reduced rate on:

grab rails

ramps

stair lifts

bath lifts

built-in shower seats or showers containing built-in shower seats

walk-in baths with sealable doors

You do not get the reduced rate if you repair or replace the goods after they’ve been installed.

You do not have to order and pay for the product yourself - a friend, local council, charity or housing association can do it for you.

How to get the reduced rate

Your supplier should know about the reduced rate and apply it. You qualify if:

you’re over 60 when the product is supplied or installed

the product is installed - you do not get the reduced rate if you just buy it

the product is for a private home, for example your own home or one shared with friends or relatives (a residential care home does not qualify)

You’ll need to confirm to your supplier in writing that you meet these conditions. They may give you a form, or you can sign your own declaration. Ask a relative, partner or other responsible person if you’re not able to fill it in yourself.

Declaration: mobility aids for older people

Sign and date the declaration, using this standard wording.

Help from your council

If you need to adapt your home because of old age you can apply to your council for equipment or help.

Tax-free shopping

You can only buy tax-free goods from shops in Great Britain (England, Wales and Scotland) if they’re delivered straight to an address outside the UK. Check with the retailer if they offer this service.

You may be able to buy tax-free goods from some shops when you visit Northern Ireland. You claim your VAT refund when you leave Northern Ireland or the EU.

When you may be able to get a VAT refund

You can sometimes get VAT refunds on goods you buy in Northern Ireland if you:

visit Northern Ireland and live outside the UK and EU

work or study in Northern Ireland but normally live outside the UK and EU

live in Northern Ireland but are leaving the UK and EU for at least 12 months

You can only get a VAT refund if you take the goods out of Northern Ireland and the EU within 3 months of buying them. Not all retailers offer VAT refunds.

Taking goods from Northern Ireland to Great Britain

You will not get a VAT refund if you travel straight from Northern Ireland to Great Britain.

If you travel from Northern Ireland to Great Britain through another country, the goods will count towards your tax-free personal allowances. You may have to declare them along with other goods you’re carrying when you enter Great Britain and pay import VAT.

This may mean you have to pay VAT again on the goods from Northern Ireland. If this happens, you can get a refund of the overpaid VAT from the retailer.

Check the rules on bringing goods into Great Britain.

How to get a VAT refund

Get a VAT 407 form from the retailer - they might ask for proof that you’re eligible, for example your passport.

Show the goods, the completed form and your receipts to customs at the point when you leave Northern Ireland or the EU.

Customs will approve your form if everything is in order. You then take the approved form to get paid.

If you’re changing planes in an EU country and checking your goods with your luggage, you must do step 2 in Northern Ireland when you check in.

Getting paid

You can either get paid immediately at a refund booth, for example at the airport, or send the approved form to the retailer or their refund company. The retailer will tell you how you’ll get paid.

Some retailers charge a fee for handling your form. This money will be deducted from your refund.

If there are no customs officials available, you can leave your form in a customs post box. Customs will check it and contact your retailer to arrange the refund if everything is in order.

Goods you cannot get a refund for

You cannot get a VAT refund for:

mail order goods, including internet sales, delivered outside of Northern Ireland

goods you’ve already used in Northern Ireland or the EU, such as perfume

service charges, such as hotel bills

new or used cars

goods worth more than £600 exported for business purposes

goods to be exported as freight

goods that need an export licence (except antiques)

unmounted gemstones

gold over 125g, 2.75 troy ounces or 10 tolas

a boat you plan to sail to a destination outside Northern Ireland or the EU

Find out more about claiming VAT back on tax-free shopping in Northern Ireland, including travelling to Great Britain and problems like losing your form.

Alcohol and tobacco duties

Tobacco Duty is included in the price you pay for cigarettes, cigars and other tobacco products.

Alcohol duties are included in the price you pay for beer, cider or perry, wine or ‘made-wine’, and spirits. Made-wine is any alcoholic drink made by fermentation that’s not beer, cider, perry, spirits or wine.

You also pay standard rate VAT at 20% on alcohol and tobacco products.

Tobacco Duty

You pay different rates of Tobacco Duty on cigarettes, cigars and other tobacco products.

Tobacco product | Rate

Cigarettes | 16.5% of the retail price plus £4.90 on a packet of 20

Cigars | £3.05 on a 10g cigar

Hand rolling tobacco | £8.14 on a 30g packet

Other smoking tobacco and chewing tobacco (for example pipe tobacco) | £4.03 on a 30g packet

Beer Duty

How much Beer Duty you pay depends on the beer’s strength, or ‘alcohol by volume’ (ABV).

Strength (ABV) | Beer Duty rate per litre for each % of alcohol

More than 1.2%, up to 2.8% | 8.42 pence

More than 2.8%, up to 7.5% | 19.08 pence

More than 7.5% | 24.77 pence

Cider Duty

You pay Cider Duty on cider and perry. How much depends on the strength and whether it’s still or sparkling.

Type of cider or perry | Strength (ABV) | Rate per litre

Still | More than 1.2% but less than up to 6.9% | 40.38 pence

Still | At least 6.9%, up to 7.5% | 50.71 pence

Still | More than 7.5% but less than 8.5% | 61.04 pence

Sparkling | More than 1.2%, up to 5.5% | 40.38 pence

Sparkling | More than 5.5% but less than 8.5% | 288.10 pence

Wine Duty

How much Wine Duty you pay depends on the strength of the wine (or made-wine) and whether it’s still or sparkling.

Type of wine or made-wine | Strength (ABV) | Rate per litre

Still | More than 1.2%, up to 4% | 91.68 pence

Still | More than 4%, up to 5.5% | 126.08 pence

Still | More than 5.5%, up to 15% | 297.57 pence

Still | More than 15%, up to 22% | 396.72 pence

Sparkling | More than 8.5%, up to 15% | 381.15 pence

You pay duty on wine and made-wine of more than 22% ABV at the same rate as spirits.

Spirit Duty

You pay £28.74 of Spirit Duty per litre of pure alcohol.

Fuel Duty

Fuel Duty is included in the price you pay for petrol, diesel and other fuels used in vehicles or for heating.

You also pay standard rate VAT at 20% on most fuel, or the reduced rate of 5% on domestic heating fuel.

Fuel Duty rates

The rate you pay depends on the type of fuel.

Type of fuel | Rate

Petrol, diesel, biodiesel and bioethanol | 57.95 pence per litre

Liquefied petroleum gas (LPG) | 31.61 pence per kg

Natural gas used as fuel in vehicles, for example biogas | 24.70 pence per kg

‘Fuel oil’ burned in a furnace or used for heating | 10.70 pence per litre

You pay different rates on other types of fuel, depending on how they’re used.

You may have to pay a penalty and could have your vehicle seized if you use ‘rebated’ oils like red diesel or kerosene on public roads. Report red diesel used on public roads to the Customs Hotline.

Insurance Premium Tax

Insurance Premium Tax (IPT) is usually included in the price you pay for insurance.

You do not pay VAT on insurance.

The rate of IPT depends on the type of insurance and who supplies it.

Standard rate IPT

The rate is 12% on most types of insurance, including car, pet and home insurance.

Higher rate IPT

There’s a higher rate of 20% for travel insurance, and insurance arranged by the supplier (rather than an insurance company) on:

vehicles, including hired vehicles - but the standard 12% rate is charged on ordinary motor insurance

electronic goods and other household appliances - this includes gas central heating but not mobile phones

Exemptions

There’s no IPT on life insurance and income protection insurance.

Air Passenger Duty

Airlines pay Air Passenger Duty (APD) for every passenger who flies from the UK. Ticket prices usually include a charge to cover this cost.

You do not pay VAT on the cost of flights.

The amount of APD the airline pays depends on how far away your destination is and the class you travel in.

On commercial passenger flights the duty costs from £13 to £180 per flight. There are higher charges for some private passenger planes or charters.

There’s no APD on long-haul flights from Northern Ireland or flights from the Scottish Highlands and Islands region.

You can check rates for Air Passenger Duty paid by operators.

If you do not take a flight

If you do not take a flight you may be able to get a refund of anything you paid to cover APD costs.

Contact your airline to see if you can get a refund. You may have to pay an administration fee.


VAT Annual Accounting Scheme

Overview

Usually, VAT-registered businesses submit their VAT Returns and payments to HM Revenue and Customs 4 times a year.

With the Annual Accounting Scheme you:

make advance VAT payments towards your VAT bill - based on your last return (or estimated if you’re new to VAT)

submit 1 VAT Return a year

From 1 April 2019, most businesses will need to keep digital VAT records and use software to submit VAT Returns.

When you submit your VAT Return you either:

make a final payment - the difference between your advance payments and actual VAT bill

apply for a refund - if you’ve overpaid your VAT bill

The scheme would not suit your business if you regularly reclaim VAT because you’ll only be able to get 1 refund a year (when you submit the VAT Return).

You can join the scheme if your estimated VAT taxable turnover is £1.35 million or less.

Talk to an accountant or tax adviser if you want advice on whether the Annual Accounting Scheme is right for you.

Join or leave the scheme

You must be eligible to join the scheme.

How to join

You can join the scheme:

online - when you register for VAT

by post - fill in VAT600 AA (or use VAT600 AA/FRS to apply for the Flat Rate Scheme at the same time)

Do not use the address on the form - send it to the following address instead.

Confirmation you’ve joined the scheme is sent to your VAT online account (or in the post if you do not apply online).

How to leave

You can leave the scheme at any time, but you must leave if you’re no longer eligible to be in it.

To leave, write to HMRC and they will confirm when you can leave. From this date, you must account for your VAT in the usual way.

You have to wait 12 months before you can rejoin the scheme.

Eligibility

You can join the Annual Accounting Scheme if:

you’re a VAT-registered business

your estimated VAT taxable turnover is £1.35 million or less in the next 12 months

VAT taxable turnover is the total of everything sold that is not VAT exempt.

Exceptions

You cannot use the scheme if:

you left the scheme in the last 12 months

your business is part of a VAT registered division or group of companies

you’re not up to date with your VAT Returns or payments

you’re insolvent

Leaving the scheme

You must leave the scheme if:

you’re no longer eligible to be in it

your VAT taxable turnover is (or is likely to be) more than £1.6 million at the end of the annual accounting year

Return and payment deadlines

Check your VAT Return and payment deadlines in your HM Revenue and Customs (HMRC) online account.

VAT Return deadline

There are 12 months in your VAT accounting period. Your VAT Return is due once a year, 2 months after the end of your accounting period.

Most businesses now need to keep digital VAT records and use software to submit VAT Returns.

Payment deadlines

You must make advance payments towards your VAT bill (either monthly or quarterly) during your accounting period and a final payment when you submit your VAT Return.

Payment | Deadline

Monthly | Due at the end of months 4, 5, 6, 7, 8, 9, 10, 11 and 12

Quarterly | Due at the end of months 4, 7 and 10

Final payment | Within 2 months of month 12

How much do you pay

Each payment is either 10% of your estimated VAT bill (monthly payments) or 25% (quarterly payments). The amount is based on previous VAT returns (or estimated if you’re new to VAT).

HMRC will write telling you when your instalments are due and how much they’ll be.

The final payment (known as a ‘balancing payment’) is the difference between your advance payments and the actual VAT bill confirmed on your VAT Return.

You may be due a VAT refund if you’ve overpaid HMRC.

You must pay VAT to HMRC electronically, for example by Direct Debit or internet banking.


VAT Cash Accounting Scheme

Overview

Usually, the amount of VAT you pay HM Revenue and Customs (HMRC) is the difference between your sales invoices and purchase invoices. You have to
report these figures and pay any money to HMRC even if the invoices have not been paid.

With the Cash Accounting Scheme you:

pay VAT on your sales when your customers pay you

reclaim VAT on your purchases when you have paid your supplier

To join the scheme your VAT taxable turnover must be £1.35 million or less.

Talk to an accountant or tax adviser if you want advice on whether the Cash Accounting Scheme is right for you.

Eligibility

You can use cash accounting if:

your business is registered for VAT

your estimated VAT taxable turnover is £1.35 million or less in the next 12 months

VAT taxable turnover is the total of everything sold that is not VAT exempt.

Exceptions

You cannot use cash accounting if:

you use the VAT Flat Rate Scheme - instead, the Flat Rate Scheme has its own cash-based turnover method

you’re not up to date with your VAT Returns or payments

you’ve committed a VAT offence in the last 12 months, for example VAT evasion

You cannot use it for the following transactions (you have to use standard VAT accounting instead):

where the payment terms of a VAT invoice are 6 months or more

where a VAT invoice is raised in advance

buying or selling goods using lease purchase, hire purchase, conditional sale or credit sale

importing goods into Northern Ireland from the EU

moving goods outside a customs warehouse

You must leave the scheme if your VAT taxable turnover is more than £1.6 million

Join or leave the scheme

How to join

You must be eligible to join the scheme. You join at the beginning of a VAT accounting period.

You do not have to tell HM Revenue and Customs (HMRC) you use cash accounting.

How to leave

You can leave the scheme at any time, but you must leave if you’re no longer eligible to use it. You should leave at the end of a VAT accounting period.

You do not have to tell HMRC you’ve stopped using it, but you must report and pay HMRC any outstanding VAT (whether your customers have paid you or not).

You can report and pay the outstanding VAT over 6 months.

If your VAT taxable turnover exceeded £1.35 million in the last 3 months you must report and pay straight away.

You must pay immediately if HMRC has written to you to withdraw your use of the scheme.