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There are times when you may pay too much tax, perhaps as a result of changing employment during the year or claiming a pension partway through a year. Although there are procedures in place that should ensure the correct amount of tax is paid by everyone, sometimes too much tax is deducted from your income. At the end of each year, HMRC tries to reconcile everyone’s records to check that the right amount has been paid and, if it has not, either issues a repayment of tax or takes steps to collect any amounts outstanding.

There are various ways to request a refund from HMRC, depending on the type of income you have.

Employment income

When you start a new employment or move to a new employer, it is important to hand in your form P45 from yourtax refund previous employer, so that the new one can operate the correct tax code. If you don’t have a form P45, you should complete a form P46 so that the employer knows which tax code to operate. Once this procedure has been completed, you will be given back monies that you may have overpaid in the current year through your salary.

If you believe that you may have paid too much tax for earlier years, you should contact HMRC and say why you believe that you have overpaid. If HMRC calculates that this is the case for the previous year, it will send you a P800 calculation detailing your income for that period and the amount paid on it. The form P800 and any repayment of tax due will be sent by September following the tax year.

Time limits for PAYE tax repayments

There are time limits in place for repayments of tax through PAYE, so it’s important to check your end of year details, especially any forms P45 and P60 that have end of year information. You must make a claim for a refund within four years after the end of the relevant tax year. For instance, for sums overpaid in 2009-10, you must claim by 5th April 2014.

Self assessment repayment claims

A claim for repayment of overpaid tax is made through your self assessment tax return. Once you have completed and submitted a return, and it is clear that a refund is due, HMRC will repay the money either directly to your bank account or by payable order.

There are other types of repayment that may be due, like savings and investments, or if you stop work part way through the year. Advice should be sought if you believe a repayment is due.

About The Author

Karl Bilby

We work very closely with our expert accountants to bring you the latest factually correct tax and accounting news. We also enjoy writing about small business news that we hope you find useful!

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