Navigating the complexities of tax forms can be daunting, especially when dealing with international matters. For individuals moving to or from the UK, understanding which form to file—P85 or P86—is crucial for ensuring compliance and optimizing tax outcomes.
These forms serve distinct purposes and cater to different circumstances, making it essential to grasp their unique requirements and implications.
Key Differences Between P85 and P86
Understanding the distinctions between the P85 and P86 forms is fundamental for anyone dealing with UK tax obligations during international relocation. The P85 form is primarily used by individuals who are leaving the UK and need to inform HM Revenue and Customs (HMRC) about their departure. This form helps determine if you are owed a tax refund or if you need to pay additional taxes for the year you leave. It also assists in updating your residency status for tax purposes, which can significantly impact your tax liabilities. 1GOV.UK. Get Your Income Tax Right If You’re Leaving The UK (P85)
On the other hand, HMRC withdrew the P86 form; any P86 received before 1 September 2010 was handled under earlier guidance, and new arrivals are processed through standard registration routes rather than a standalone “arrival” form. 2GOV.UK. EIM42900: Action On Receipt Of Completed P86 (Withdrawn)
One of the main differences lies in the timing and purpose of these forms. While the P85 is concerned with the financial year in which you leave the UK, arrivals now establish their position through normal HMRC processes (for example, employer PAYE onboarding or registering for Self Assessment), not via a P86. Additionally, the forms require different sets of information, reflecting their distinct roles in the tax system. The P85 will ask for details about your departure date, your employment status before leaving, and any UK income you continue to receive. Conversely, there is no current P86 form to complete when arriving in the UK.
Eligibility Criteria for P85 and P86
Determining eligibility for the P85 and P86 forms is a nuanced process that hinges on your residency status and the specifics of your international move. For the P85 form, eligibility is primarily based on your intention to leave the UK and the duration of your absence. If you are planning to leave the UK permanently, or for at least one full tax year, you generally use the P85 to tell HMRC you have left or are leaving and to claim a possible tax repayment; if you already complete a Self Assessment tax return for the year you leave, you normally do not need to submit a P85. 3GOV.UK. Get Your Income Tax Right If You’re Leaving The UK (P85)
The P86 form is no longer in use. Individuals arriving in the UK establish their tax position through standard HMRC processes rather than a dedicated arrival form, and your residency will be assessed under the usual rules for UK tax.
Both forms require a clear understanding of your residency status, which can be complex. The Statutory Residence Test (SRT) is often used to determine this status. The SRT considers various factors, including the number of days you spend in the UK, your ties to the country, and the purpose of your stay. For the P85, the SRT helps establish whether you are leaving the UK for a sufficient period to be considered non-resident. For arrivals, your status is assessed through the SRT within HMRC’s standard processes.
Filing Process for P85 and P86
Navigating the filing process for the P85 and P86 forms requires a thorough understanding of the documentation and steps involved. For those leaving the UK, the P85 form can be submitted online or by post. You typically need your P45 details when you claim, and those who are already filing a Self Assessment tax return for the year of departure usually do not submit a P85. 4GOV.UK. Get Your Income Tax Right If You’re Leaving The UK (P85)
For individuals arriving in the UK, there is no P86 to complete. Instead, you’ll be brought into the system through standard routes such as your employer’s PAYE starter process if you’re employed, or by registering for Self Assessment if you are self‑employed or otherwise need to file a tax return. Keep records of your arrival date, employment details, and any foreign income so HMRC can assess your position correctly.
Both situations benefit from keeping supporting documentation. For the P85, this might include your P45 form from your last UK employer, details of any UK pensions, and information about any property you own in the UK. For arrivals, maintain evidence of foreign income and previous tax residency, as these can affect your UK tax obligations.
Common Mistakes in P85 and P86 Forms
Filing the P85 and P86 forms can be a meticulous process, and even minor errors can lead to significant complications. One common mistake is providing incomplete or inaccurate information. For instance, failing to accurately report your departure or arrival date can result in incorrect tax assessments. It’s essential to double-check all dates and details before submission to ensure they align with your travel and residency plans.
Another frequent error is neglecting to include all sources of income. Whether it’s foreign income for arrivals or ongoing UK income for the P85, omitting these details can lead to discrepancies in your tax calculations. This oversight can trigger further inquiries from HMRC, prolonging the process and potentially leading to penalties. Keeping a comprehensive record of all income sources and ensuring they are accurately reported is crucial for a smooth filing experience.
Misunderstanding residency status is another pitfall. The Statutory Residence Test (SRT) can be complex, and misinterpreting its criteria can result in incorrect residency declarations. This is particularly problematic for individuals with ties to multiple countries. Consulting with a tax advisor who understands the nuances of the SRT can help clarify your residency status and ensure that your form is completed correctly.