International Students: Claiming Tax Refunds In The Uk

Foreign students in the UK are often required to pay taxes on their earnings, but they may also be eligible for tax refunds under certain circumstances. For instance, international students who have overpaid their taxes may be able to claim a refund, and those who are non-EU residents can sometimes get VAT refunds on purchases made in the UK within the last three months before leaving the country for 12 months or more. It's important for international students to understand their tax obligations and entitlements, as well as the potential impact of tax treaties between the UK and their home country. By staying informed, they can avoid common tax pitfalls and ensure they don't end up paying more tax than necessary during their time in the UK.

Can international students get a tax refund in the UK?

International students working part-time in the UK

International students can work part-time in the UK, but there are several factors to consider, including visa status, course structure, and tax implications. Firstly, let's address visa requirements. To work legally in the UK as an international student, you typically need a student visa. This visa generally allows part-time work during term time, up to a maximum of 20 hours per week, and full-time work during vacations, provided your employment is temporary. However, it's important to note that students on part-time courses may not be eligible for a work permit, as the primary purpose of a student visa is to study rather than work. Therefore, it is essential to consult your university's student support department or the UK government's official website for specific guidance regarding your visa status and work permissions.

Next, we'll discuss course structure. International students on full-time educational courses in the UK are usually permitted to work part-time. However, it is recommended that students work no more than six to ten hours per week to maintain a healthy balance between work, study, and leisure. Additionally, the number of working hours may depend on the student's sponsor and course type. Students under 18 who are sponsored by independent schools can work part-time after turning 16.

Now, let's address the tax implications for international students working part-time in the UK. If you work part-time while studying, you may need to pay Income Tax and National Insurance if your income exceeds a certain threshold, known as the personal allowance. Your employer will typically deduct these taxes through Pay As You Earn (PAYE). If you work only during holiday periods, your employer will ensure you don't pay too much tax. If you think you've overpaid taxes, you can use the student tax checker to see if you're due a refund. If you're self-employed, you'll need to complete a Self Assessment tax return annually, declaring your income and expenses to HM Revenue and Customs (HMRC).

Finally, when leaving the UK, non-EU residents who have studied in the UK may be eligible for VAT refunds on purchases made in the UK within the previous three months. However, claiming this tax refund confirms that you won't enter the UK or EU on specific visas for the next 12 months, which may impact your graduation or any required resits or retakes. Therefore, careful consideration is necessary before claiming this tax refund.

Foreign income and gains

Foreign students in the UK usually do not pay UK tax on foreign income or gains, as long as they are used for course fees or living costs. However, it is important to note that students have no special status in the UK tax system, and are generally liable for UK tax and National Insurance contributions in the same way as other UK taxpayers.

If you are a non-EEA and non-Swiss student, the position varies depending on the country. It is recommended to consult the UK Council for International Student Affairs to check the position for your country of origin.

If your country has a double-taxation agreement with the UK, you may not have to pay UK tax on your foreign income. However, if your country does not have such an agreement, you will have to pay tax in the same way as others who come to live in the UK. HM Revenue and Customs (HMRC) may ask you to account for your living costs if they exceed £15,000 in a tax year, excluding course fees.

If you are resident in the UK, you will pay tax on your worldwide income and gains for the tax year. If you are not domiciled in the UK, you can take advantage of the remittance basis of taxation, where only the foreign income and gains brought into the UK will be taxable. This can be a complicated process, and it is recommended that international students with foreign income or gains seek professional advice.

Tax treaties between the UK and other countries

International students in the UK on a Student Visa are subject to the same tax rules as UK residents. This means that if you are working during term-time or the holidays, you may need to pay Income Tax and National Insurance if you earn over your Personal Allowance. Your employer will usually deduct these from your wages through Pay As You Earn (PAYE). If you are working for yourself, you will need to fill out a Self Assessment tax return each tax year. If you have overpaid tax, you may be able to claim a refund.

In terms of tax treaties, the UK has agreements with several countries to ease the tax burden on citizens living abroad and to prevent double taxation. For example, the US-UK tax treaty, formally known as the "Convention between the Government of the United States of America and the Government of the United Kingdom of Great Britain and Northern Ireland for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and on Capital Gains", protects US expats in the UK from paying more than their fair share of US taxes. The treaty also addresses tax evasion, income taxes, and capital gains taxes.

Another example of a tax treaty is between the UK and Antigua and Barbuda, which involves the exchange of information relating to tax matters.

The UK likely has similar tax treaties with other countries, although the specific details of each treaty may vary. These treaties are designed to alleviate the tax burden on citizens living abroad and to prevent double taxation.

Self-employed international students

If you are an international student in the UK, you may be entitled to a tax refund when you leave the country. This applies if you are a non-EU resident who has been studying in the UK and you leave the UK and the EU for 12 months or more. In this case, you may be able to claim VAT refunds on purchases made in the UK within the last 3 months. However, claiming this refund confirms that you will not enter the UK or EU for the next 12 months on a Student, Short-term study, or tourist visa. This could impact your ability to return for your graduation or any resits or retakes you may need to complete your course.

If you are an international student working while studying in the UK, you may need to pay Income Tax and National Insurance, depending on how much you earn. If you are self-employed, you will need to fill out a Self Assessment tax return each tax year, declaring your income and expenses. This will allow HM Revenue and Customs (HMRC) to calculate how much tax you need to pay. You must register as self-employed within three months of starting work.

As a self-employed international student, you can use HMRC's tax checker or contact HMRC directly to find out if you may have paid too much tax and if you are eligible for a refund. If you normally live and study in the UK but work abroad during the holidays, you will still count as a UK resident for tax purposes for that tax year. You will be liable for UK tax on any income earned above your Personal Allowance. However, if your overseas employer also taxes you and you are unable to claim this tax back from the foreign authorities, you may be able to claim a deduction or credit in the UK.

It is important to note that foreign students usually do not pay UK tax on foreign income or gains as long as they are used for course fees or living costs. However, HMRC may ask you to account for your living costs if they exceed £15,000 in a tax year, excluding course fees. Additionally, some countries have a ''double-taxation agreement' that covers students, so it is essential to check if this applies to your country of residence.

VAT refunds for non-EU residents

International students in the UK may be able to claim a tax refund when they leave the country. If you are a non-EU resident who has been studying in the UK and you leave the UK and EU for 12 months or more, then you may be able to claim VAT refunds on purchases made in the UK within the last 3 months. By claiming the tax refund, you are confirming that you will not enter the UK or EU for the next 12 months on a Student visa, short-term study, or tourist visa.

Non-EU residents can claim VAT refunds on certain goods purchased in Northern Ireland and take them out of the EU through the VAT Retail Export Scheme. This scheme previously applied to England, Scotland, and Wales for purchases made on or before 31 December 2020.

Businesses registered outside the UK can reclaim VAT incurred in the UK through the VAT refund scheme. To use this scheme, you must meet the following conditions:

• Have no place of business or residence in the UK and do not make any supplies in the UK (except for transport services related to the international carriage of goods or supplies where VAT is payable by the person in the UK to whom the supply is made).
• Your country must allow similar concessions to UK businesses with respect to its own turnover taxes.

If you are importing goods into the UK, you can reclaim any VAT due if there is no VAT relief available at import. However, you cannot use the scheme if you become liable to register for VAT in the UK due to importing goods. Only the owner of the goods can claim import VAT, and ownership confers the 'right to dispose of goods as owner'.

To claim your VAT refund, you must submit your claim within 6 months after the end of the 'prescribed year' when you were charged the VAT. The prescribed year runs from 1 July to 30 June, so claims must be made by 31 December. You must include the original invoices showing all the VAT you are reclaiming. When claiming for the first time and every 12 months after that, you must provide an official certificate proving that you are registered as a business in your country.

Frequently asked questions