Backpacking is popular for people from all walks of life, despite the stereotype backpacking is more than just the hobby of students on a gap year. Backpacking allows you to see and experience all new cultures and generally get a better understanding of the world.
You’ll meet new people, experience new things, learn new skill, make new friends and have plenty of fun. There’s a real sense of adventure when it comes to backpacking and you’re sure to look back fondly on your backpacking memories for years to come.
But before you pack that bag and get your travel plans ready you have to make sure HMRC are informed. This will ensure you’re paying the right taxes and you could also be due a tax rebate as well. If you are reading this and you have already left the UK don’t worry you have up to four years to claim and don’t have to be in the UK to request your entitlement.
Tax Refunds If You’re Leaving The UK
So what tax rebates could you receive if you’re going backpacking? And what tax could you still be liable to pay? First of all if you’re travelling overseas and won’t be working in the UK until after the end of the tax year then it’s highly likely you will be due a payment from HMRC.
However, this will only be the case if you’ve already worked in the UK in that year and have been paying tax, so if you have you can apply for a tax rebate. How you go about doing this will depend on a few different factors.
If you have worked under PAYE and have had no self employment then you’ll normally need to fill in a P85 form and provide your P45 if you can. This process will allow the tax office to calculate whether you are due UK tax back.
If I Get A Job Do I Still Pay Tax?
Many backpackers will find the odd job to supplement their trip. In most circumstances you will not need to pay UK tax on that income.
If you leave income behind in the UK you will usually have to pay tax on that income as normal. This includes pensions, rental income and savings interest. The current tax free personal allowance is £11,500 per tax year so you will only have to pay income tax if you go above that amount.
In the majority of cases being a non resident for tax purposes in the UK will not affect most backpackers. The non resident tax rulings are complex and relate mainly to people who pay UK tax and live in another country. A self assessment tax return should be completed to declare your non resident status in the UK.
National Insurance
Backpackers travelling abroad can continue paying their national insurance while abroad if they wish and you can in some cases make voluntary contributions as well. HMRC will protect your state pension if you continue paying national insurance and you could receive other benefits as well especially if you plan on returning to the UK.
If you take a job in a country with a bilateral social security agreement like the USA or Canada for example you will instead have to pay social security contributions to that country instead.
