Claiming Tax Back

Sometimes the Inland Revenue gets it wrong or puts you on an emergency tax code, and you need to put in a tax claim rebate form to get a refund from HMRC.

Don't worry though because it's all very straightforward, especially if you've been claiming the correct allowances or pay tax via PAYE.

Self Assessment Statement

Everyone in the UK has to submit a self-assessment tax form. The submission shows your total income and the tax already paid either through PAYE or if you are self-employed via your half-yearly payments on account.

In years gone by you could send your return to HMRC and they would calculate your tax liability and issue you with a statement showing if you have underpaid or overpaid tax. Now you have to complete all the paperwork yourself.

The P800 Tax Calculation

With all the information from your employer, tax returns, and pension providers, HMRC reconciles your income and tax paid each year automatically.

The result of the calculation means one of three situations:

  • You've paid exactly the right amount of tax.
  • You have not paid enough.
  • You've overpaid and are due a refund.

If you're due a refund, the P800 letter informs you what happens next. Sometimes you'll receive a cheque while in other cases you need to claim the refund online using the HMRC website.

If you disagree with the letter you need to inform HMRC right away. If you have underpaid your tax liability, then your tax code for next year will reflect the underpayment.

Situations Where You May Need To Claim a Tax Refund

For the majority of people, the tax paid is always correct and no further action needs taking. Below are examples where you may have paid too much and are looking to claim the overpayment back from HMRC.

  • You only worked for part of a year.
  • Your employer has been using the emergency BR tax code.
  • Your employer is using the wrong code.
  • Your pension provider informed HMRC of an incorrect amount of income.
  • A second job used the wrong tax code.
  • You're working part-time and earn less than the Personal Allowance.

There are a variety of reasons why people overpay tax. It's best to check any statements from the Inland Revenue and double-check your self-assessment statement each year.

Calculating Emergency Tax Implications

If you haven't yet got a tax code, you'll be issued an emergency tax code at the time of employment. This situation may result in you paying too much tax in the first few months if you are on PAYE. Once you receive your real tax code, your employer will recalculate your tax. If you've paid too much, it will get sorted out that month and any rebate for overpayment will be made good in that month's payment.

I Earn Less Than My Tax Code

In general, everyone gets the tax free 1150L code meaning you can earn up to £11,500 before paying tax in the current year and should receive that tax code which you need to pass onto your employer.

Have You Paid Too Much Tax?

In many cases, you may have some allowable expenses that you can claim against your income. You need to let HMRC know about these to ensure your tax code is correct so that everything gets taken account of at source.

If at the end of the tax year you have received your P60, performed calculations and believe you have paid too much tax, then you can telephone your local HMRC office and discuss the details with them. They are a friendly bunch and deal with these types of enquiries each and every day. HMRC do make mistakes and are happy to put things right if required.

Tax Refunds and Students

Many students earn very little during the year. If you have made less than £11,500 in the current tax year with tax deducted at source, then it's quite likely that you have a claim for a tax refund.

You would have had tax deducted because either:

  • Your employer has to tax you as though you were going to work for a full calendar year, or
  • You were taxed based on an emergency tax code.

Again, as with the advice above, either complete a self-assessment form either using a recent P45 or P60 or telephone your local tax office. You'll find the telephone number and address on any correspondence you have received from them.