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Each year, every person is given a tax free allowance. This is the amount that can be earned before paying any tax. Once income has reached the level of the tax free allowance, which is £8,105 for the 2012-13 tax year, a person will start to pay tax on income earned during a week or month.

For someone with just one employment or one pension and the state pension, the tax system is relatively straight forward and the correct amount of tax is normally deducted during the year. However, it is possible, especially when circumstances are more complex, that too much or too little tax is paid. HM Revenue & Customs will attempt to collect underpaid tax through the next year’s tax code, although this isn’t always possible. Any tax which has been overpaid will be given back to the taxpayer after the end of the tax year, although this can be a lengthy process.

If you are employed but believe you are paying too much tax each time you are paid, contact HMRC. They may require more information to send you the correct tax code. Once the correct tax code is sent to your employer, you will receive a refund of tax through the next pay period when the correct tax code can be operated. If you have ceased employment part way through a tax year and don’t work or receive any taxable benefits before the next 5th April, you may be due a tax rebate. To claim your tax rebate, complete form P50 and return to HMRC along with your form P45 Parts 2 and 3 which you will have been given by your last employer. HMRC will send any repayment of tax which is due and if you have any unused allowances, they will send a revised P45 Parts 2 and 3 for you to hand in to a new employer or claim a further refund in four weeks’ time.

You may have left employment and now be claiming Jobseekers Allowance or other taxable benefit. In this case, any refund which is due will be made by the Benefit Office when the tax year ends or when you cease your claim. P45 Parts 2 and 3 should be handed in to the Benefits Office to be sure that any refund will be made. You may also start a new employment within four weeks of ceasing your previous employment. In this case, hand in your form P45 Parts 2 and 3 to the new employer so that any tax which is due will be repaid through your new salary.

If you are self-employed, any repayment of tax which is due will be made once you have completed your self assessment tax return. Make sure that you complete and submit all appropriate supplementary pages of the tax return so that all income can be calculated. A self assessment tax return is completed for each year that you are within the self assessment system. You will be sent any repayment of tax which is due as soon as your tax return has been filed and tax due has been calculated. If you submit your tax return online, the system will calculate the amount of tax which is due and will notify you of any repayment which is due. If you end self-employment part way through the tax year, you can complete the tax return to the date of cessation.

From 6th April 2013, the earliest year you can claim a tax repayment for is 2009-10. Any claims for 2008-09 will not be accepted after 5th April 2013.



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