When you are working or self employed, it is sometimes possible to pay too much tax during a tax year. There are many reasons for this when you are employed, like having multiple employments or a pension in addition to an employment. If you become unemployed during the tax year or are a student working in the holidays, you may find that you pay too much tax. If you cease self employment during the tax year or make a mistake when completing your self assessment tax return, you may find you have paid too much tax.
If you become unemployed during the tax year, claiming a repayment is dependent on the circumstances. If you claim Jobseeker’s Allowance, taxable Incapacity Benefit or Employment and Support Allowance, you will be paid any refund of tax due by the Benefit Office, either at the end of the tax year or when your claim ends. If you become unemployed and find a new job within four weeks, you will hand in your P45 parts 2 and 3 to your new employer who will pay any overpaid tax through your wages. If you are unemployed for more than four weeks and don’t claim benefits, or retire or return to education, completing a form P50 and returning it to HM Revenue & Customs with your P45 parts 2 and 3 will be necessary. HMRC will make any refund which is due, either by payable order or directly to your bank account or nominee. If you have retired from your employer but they pay you a pension, any tax repayment which is due will be paid with your pension payments.
If you are self employed and have made a mistake when completing your self assessment tax return, you will have 12 months from 31st January following the end of the relevant tax year to inform HMRC, which is called an ‘amendment’. If the mistake is discovered more than 12 months after 31st January following the end of the relevant tax year, you should write to HMRC with the details of the error, evidence of tax paid and details of which tax year it concerns.
There are time limits for requesting a repayment of tax, and these depend on whether you are employed or self employed. You have four years to claim a tax repayment if you are self employed; 2007-08 should be claimed by 5th April 2012. If your tax is dealt with through the PAYE system, you will have four years to claim back any tax due from the year 2007-08 onwards. However, 2005-06 tax has to be claimed by 31st January 2012 and 2006-07 has a deadline of 31st March 2012.
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