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None of us enjoy having to pay tax, so finding out that you’ve paid more tax than you should can be particularly alarming. Fortunately, you may be able to claim a refund if you overpay the tax you owe to HMRC. It’s not as uncommon as you might think, so in this article we’ll go over what to do next.

What is a tax rebate?

A tax rebate is a refund of any tax that you pay which exceeds what you actually owe. Most of us normally pay tax on taxable income that we earn, but there might be times when we end up overpaying. If this happens, you may be able to claim a rebate to get back the tax you overpaid.

Do HMRC automatically refund overpaid tax?

This depends on whether you’re employed, self-employed, or receive a pension, and what type of income you think you might have overpaid tax on. You’ll normally only receive an automatic tax refund if you’re registered for Self Assessment, but this is not always the case. It’s why it’s so important to check you’re paying the right amount of tax!

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What happens if I pay too much tax on employed income?

If you’re employed or receive a pension and pay too much tax by the end of the tax year, HMRC will send a tax calculation letter (also known as a P800).

Your P800 will usually include the details of your total income for the year, the tax that has been paid, and how much tax you still owe or are due as a refund. The letter will also explain how to get a refund for your overpaid tax.

What should I do if I don’t receive a tax calculation letter?

The letters are normally sent out between June and November, but if you don’t receive one and think you have paid too much tax, you might still be able to claim a tax refund online.

If you think that your employer has deducted too much income tax from you, you might also need them to contact HMRC to confirm the correct amount. There are a few reasons that this can happen, such as if you:

  • Have more than one job
  • Are placed on the wrong tax code
  • Start a new job and don’t have a P45. Your new employer will normally ask you to complete a New Starter checklist, but might also place you on an emergency tax code
  • Retire from employment during the year, before starting to receive a pension

Check your payslips carefully, or your P60 which shows all of the tax paid in a tax year. You can also check your Personal Tax Account to see what tax information HMRC have for you.

Any overpayments are normally adjusted at the end of the year or corrected through the following year’s tax code, but if you leave work before that can happen then you may be able to request a tax refund.

What if I start working elsewhere?

You’ll only need to claim if you are out of work for more than 4 weeks and have not returned to work.

How can I claim back income tax if I leave work?

If you stop working in the middle of a tax year, for instance because you’ve been made redundant, retire, or decide to return to full-time education, you might be able to claim back some of the tax that you paid while you were working, as long as you:

  • Have had your final pay from your employer
  • Are not in receipt of taxable benefits or a pension from your employer
  • Haven’t started a new job

You’ll normally be able to submit your claim online using a Government Gateway account (you can set this up fairly easily if you don’t already have one), or you can claim through the post using a P50 form.

HMRC can take up to 14 days to process a claim. Once it has been processed you will either receive a payment by cheque or bank transfer, or HMRC will write to you and explain why the claim has been rejected.

Can I reclaim tax if I pay too much on self-employed income?

Yes, you can, but the process for receiving a tax refund is a bit different if you’re registered for Self Assessment.

You won’t receive a P800 tax calculation letter or a Simple Assessment letter if you’re registered for Self Assessment.

If you’re registered for Self Assessment and pay too much tax, HMRC will adjust your tax bill automatically. You’ll be asked to confirm where you would like them to send your overpayment (it’s normally straight to your bank).

This is particularly common for subcontractors who aren’t registered through the Construction Industry Scheme and work for a contractor.

Can I claim a tax refund on savings and investments?

Your bank or building society will usually apply the Personal Savings Allowance on any interest you earn from savings and investments, and then you’ll pay tax on any interest you earn above it.

If you think that you’ve paid too much tax on savings interest, you can request a refund online, or by using an R40 form (using a separate form for each tax year you’re claiming for). Parents can also use the form on behalf of their children to reclaim tax deductions made on a child’s savings.

Can I claim back tax if I leave the UK?

If you leave the UK for a longer period of time you might be able to claim tax relief or a refund of any tax that you’ve already paid. Claims can be made online using a Government Gateway account, or through the post using a P85 postal form.

How far back can I claim a tax overpayment?

You can normally claim a tax rebate on overpaid tax four years from the end of the tax year in which the overpayment happened.

If you’re submitting a claim for multiple years, make sure that you don’t backdate it further than you’re allowed! Your claim might be rejected, and you may not be able to reclaim the overpaid tax, even in more recent years.

Tax is a complicated subject, and nobody likes having to pay more than they need to! Learn more using our tax articles and guides, or chat to one of the team about our online accounting services. Call 020 3355 4047 and get an instant online quote.

About The Author

Lisa Hinton-Hill

I've worked in the accountancy sector for more than 15 years, and have extensive experience supporting sole traders, partnerships, and SME's. Learn more about Lisa.

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