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A tax rebate is a refund of any tax paid which exceeds your tax liability. Everyone has to pay tax on any taxable income. However, there are some circumstances that may result in more tax being paid than is actually due during a particular tax year. If this is the case, you may claim a tax rebate.

A tax year runs from 6th April one year to 5th April in the next year. During this tax year you will be given a tax code which will be operated against your income during the year. Each person, whether employed or self employed is entitled to personal allowances which is an amount that can be earned, or other income without being taxed. The basic personal allowance for 2011-12 is £7475.

A person may pay an incorrect amount of tax if the wrong tax code is operated against income. For instance, code BR may be used which deducts tax at the basic rate without any personal allowances being given, resulting in more tax being paid than is due if this is your only income. Multiple employments or expenses being incurred during the course of your business may also result in a tax rebate being due.

If you are self employed, any tax rebate which is due will be calculated when your self assessment tax return is submitted to HM Revenue & Customs. If you are employed and change employments during the year you may receive your tax rebate through your wages, or alternatively contact HMRC.

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