Last updated on August 16th, 2024 at 03:32 pm
Tax can be a confusing topic when you’re new to the UK. If you’re resident in the UK according to the Statutory Residence Test, you already know you have to file a tax return to HMRC, the tax system authority in the UK that collects money to pay for public services.
But do you know which tax deductions you’re entitled to when living in the UK? Understanding tax deductions (also known as tax relief) can save you money when you know how and when to claim them.
Here’s Remitly’s guide to help you work out what you can claim and take you through the steps involved in claiming tax deductions for immigrants to the UK.
Who can claim tax deductions in the UK?
If you pay taxes in the UK, you can claim tax deductions unless you are subject to immigration control. The stamp on your passport will show the conditions of your stay in the UK. If this says “no recourse to public funds” then you cannot claim tax deductions. Public funds include universal credit, pension credits and most benefits.
You can claim public funds if you have any of the following:
- British or Irish citizenship,
- settled status from the EU Settlement Scheme,
- indefinite leave, unless you came to the UK on an adult dependent relative visa,
- refugee status or humanitarian protection,
- right of abode.
If you’re a student and you have permission to work in the UK, you’ll normally be liable to pay UK tax and National Insurance contributions in the same way as other UK taxpayers. This means you can take advantage of tax allowances and deductions such as personal allowance and tax relief on pension contributions.
If you’re not a UK resident and your home country has a double tax treaty with the UK, you may be able to claim part or full relief from UK tax on your UK income. Double taxation can be quite complex, so this guidance on relief for non-residents under double taxation agreements is a good place to get information.
What tax deductions are available for immigrants in the UK?
Personal Allowance
If you’re employed, you must pay income tax on anything you earn that exceeds the tax-free personal allowance, which in June 2024 was £12,570. However, you can claim tax deductions on certain job expenses. These include:
- additional household costs if you have to work at home for all or part of the week, for example business phone calls or energy costs for your work area,
- uniforms, specialist work clothing and tools,
- mileage for work journeys if you use your own car, or fuel costs if you have a company car,
- travel and accommodation expenses for business trips,
- professional membership fees, if you must pay the fees to be able to do your job,
- buying essential equipment you need to do your job, such as a computer only used for business purposes.
If you’re self-employed, you can claim for these expenses through your self-assessment tax return. Keep detailed documentation such as receipts, bills and invoices, because you may need to provide proof to HMRC.
Universal Credit
Universal Credit is a payment to help with your living costs, such as rent and energy bills. Eligibility is based on your immigration and residence status.
But generally speaking, you can claim universal credit if:
- you are not subject to immigration control,
- you are living in Great Britain at the time of your claim,
- you are either habitually resident with a right to reside, or exempt from habitual residence.
Council Tax
You may be able to pay less council tax, or not pay it at all, depending on your circumstances.
- If you’re the only adult in your home, you’ll get a 25% discount on your council tax bill.
- If everyone in your home is a student, you won’t pay any council tax.
- If some people living in your home are “disregarded” under council tax regulations, they won’t be counted. This includes:
- people living in the UK under the “Homes for Ukraine” scheme.
- people in education or training,
- people under 18 living at home, and people with learning difficulties.
- If everyone in the property is disregarded, you’ll get a 50% discount on your council tax bill.
- If you or someone you live with is disabled, you may be able to get a reduction on your council tax bill.
Working tax credit
If you’re working a certain number of hours in the UK, over 16 and on a low income, you might be able to claim working tax credit. Conditions depend on your personal circumstances—here’s a handy guide to the rules.
Child tax credit
If you’re claiming working tax credit and you have children, you might also be eligible for a child benefit called child tax credit. The amount varies depending on how many children you have, how old they are and other specific circumstances. There’s a handy page on the UK government website.
Marriage Allowance
This allows you to give up some of your personal allowance to provide a tax credit that can reduce the income tax your spouse or civil partner pays. It’s also known as the transferable tax allowance for married couples and civil partners.
This is different from the married couples’ allowance, which you should only consider claiming if one of you was born before 6 April 1935. The marriage allowance for 2024/25 is £1,260.
Blind Person’s Allowance (BPA)
Like the personal allowance, this is deducted from taxable income before income tax is calculated. However, it’s not automatic—you do have to claim it. The BPA for 2024/25 is £3,070.
You’re entitled to the BPA if:
- you live in England or Wales and are registered as severely sight impaired with a local authority,
- you live in Scotland or Northern Ireland and your sight is so bad as to stop you performing any work for which eyesight is essential.
How to claim tax deductions
Personal Allowance
If you’re employed or receive a pension, it’s worth checking your income tax to see if you’ve paid too much tax. If you have, you may be entitled to a refund.
If you’re self-employed, it’s a requirement to keep a record of your expenses and record these on your self-assessment tax return. Consider using a professional accountant to fill this out for you, because the UK tax return form can look a bit overwhelming.
If you’re subject to a double taxation agreement, you may be able to claim a UK personal allowance. The notes on form R43 will show you if this applies to you.
You may also have to pay tax on foreign income. This depends on whether your permanent home is in the UK or abroad.
Universal Credit
Check the gov.uk website to find out how to create an account and make a claim for Universal Credit.
Council Tax
To see if you’re eligible for a council tax discount, check your council’s details on the government website—just enter your postcode to find out more details.
Marriage Allowance
You can apply for Marriage Allowance online via the UK government website.
Blind Person’s Allowance (BPA)
You can apply for Blind Person’s Allowance by phoning HMRC on 0300 200 3301, 8am to 6pm Monday to Friday.
Common mistakes when claiming tax deductions
Working “cash-in-hand”
You may be tempted to think that “cash-in-hand” jobs mean you don’t pay any tax. These often involve working without proper documentation or legal authorization, which is against UK immigration laws. Engaging in such work as an immigrant in the UK could jeopardize your visa status and result in serious consequences, including deportation.
Cash-in-hand jobs usually do not adhere to tax regulations, leading to under-reporting of income and non-payment of taxes. You could find yourself facing legal penalties, including fines and back taxes owed to HMRC. Failure to declare your income accurately could also impact future visa applications and renewals.
Missing deadlines
Remember that if you are self-employed, you must file your tax return, and claim any relevant expenses, by 31 January 2025 for the 2023-2024 tax year. Otherwise you may be subject to a penalty.
International assets: are you liable for capital gains tax?
If you are resident in the UK and want to sell property you own either in the UK or abroad, you may be liable to capital gains tax (CGT). This is a complex area, so consider getting legal advice.
Where to get help with claiming tax deductions
If you’re a student, your university should be able to help you with any financial questions. The UK Council for International Student Affairs also has many helpful resources.
Another useful source is Citizens Advice. It’s a national charity with several regional branches, offering free confidential advice online, over the phone and in person.
The NRPF Network website has detailed information on how immigration status affects your entitlement to services and offers support for people who have no recourse to public funds.
FAQs
What do I need to start dealing with my taxes in the UK?
Everybody who’s living, working or looking to start work in the UK needs a National Insurance number. Here’s some information on how to apply for one.
Can migrants to the UK claim tax deductions there?
Yes, if they fulfill the criteria to live and work there or certain other conditions. There are lots of different tax credits for everything from low-income work, being married, having children, having a disability, living alone and more. Check out our handy guide.
How do I claim tax deductions in the UK?
It depends which deductions you’re applying for. A tax professional or Citizens Advice could help you find out which deductions you’re eligible for.
How do I work out if my fiscal contribution in the UK is correct?
The gov.uk website has a handy set of tools and calculators to help you assess if you’re paying tax correctly.