How to claim a Tax Refund
Latest Deals is here to help you understand what you need to do to get your money back after paying too much money in taxes. Also learn more about tax rebates.
What is Tax Refund?
A tax refund is any money you receive back after paying taxes. There are many reasons you can ask for a tax refund. Usually, they are related to expenses you have throughout the year.
For example, if you are self-employed, you can claim money back by providing the expenses you incur to do your work. For example, heating your home office or buying office equipment.
If you are a landlord, you can claim money back by providing your expenses to maintain or improve your rentals.
If you are a full-time or part-time employee, you can also claim expenses such as uniforms, transportation, education and others.
Some other reasons you can ask for a tax refund are:
- If you are leaving the UK
- If you need to buy hand tools and protective clothing to do your job
- If you have a private pension and are paying too much taxes
- If you are not a UK resident
- If you need to travel a lot to work
IMPORTANT NOTE: You can also claim tax back if you donate to charity.
What is a Tax Rebate?
Tax rebate is a type of tax refund, which only applies when you have paid more tax than you should when it’s discounted directly from your wages or pension payments.
As your circumstances can change during the course of the tax year and sometimes, your employee or pension provider doesn’t use the correct tax code, you can be charged more than you should.
In many cases, you don’t need to claim a tax rebate, because of the P800 tax calculation, which happens every year to make sure you were charged correctly and to process any refunds you are entitled to receive.
What is the P800 tax calculation?
Every year, your employer or pension provider gives to the HMRC details about your income.
This document will describe how much your salary or pension is, if you have received any taxable extra benefits and how much tax you have paid on these things.
With this information, HMRC will know if you have or not paid the right amount of tax. If you have paid the correct amount, you won’t receive any letter. If you have paid less or more tax, you will receive a letter with the P800 tax calculation.
If HMRC comes to the conclusion you have paid more taxes than you should, the letter will say the amount of money you are entitled to receive back.
That means that you won’t need to do anything most of the time. This letter is automatically sent to your home address informing you of the amount you are due to receive.
You can then choose to wait for the check, which arrives a couple of weeks after or go online to ask for a bank transfer, which takes a couple of days.
If HMRC comes to the conclusion you have paid fewer taxes than you should, the letter will say the amount of money you need to pay and how you can pay.
Usually, you will pay for this during the course of the next year and in instalments, deducted from your gross salary.
Is it free to claim tax back?
You can claim tax back totally for free if you do it by yourself. You can do this by using this link. Some companies offer to do claims for you, and they usually charge for that. If you are willing to learn more about tax refund, you can make sure you are getting as much as you can back.
IMPORTANT NOTE: If you have a complex tax situation, it’s always better to get advice from a tax professional, such as a qualified accountant.
How to reclaim overpayments?
PAYE - Pay As You Earn System
If you are employed by a company that gives you regular payments, or you receive pension, you usually pay your income tax via PAYE. As mentioned above, you don’t need to do anything, usually, the P800 tax calculation corrects any mistakes made. You can try to claim a refund online using HMRC’s website, which will guide you to the best option for your case.
What are P45 and P60 forms?
These are types of PAYE forms, both show how much tax you have paid in that year. The first one you only receive if you have left your job and the other you should receive every year.
Usually, your employer will provide you with them. In some cases, you might be asked to provide one of these forms or both, depending on your case.
Tax relief for employees
If you have lots of expenses to do your job, you can ask for tax relief. It’s not very common for people that have full-time or part-time jobs to ask for this, but it’s within your rights. If you had to buy a new computer, or are working from home, you can get 20% back of your total expenses (which it’s the VAT). Learn more about it here.
Self-assessment Tax Return
If you are self-employed or have different forms of income, such as rentals, you need to declare your income via a self-assessment tax return.
Once you have submitted your tax return, this will be processed just like in the PAYE system, so if there are any mistakes, you will be contacted by HMRC.
You will access your profile with your application to do any amendments that explain why you have paid too much in taxes.
IMPORTANT NOTE: The best way to avoid paying too much tax in self-assessment tax return cases is by informing all the expenses you had that year to keep doing your job. You might get tax back from these expenses.
For example, if you paid for a £100 course, you might get back £20. You won’t get the full value back, only 20%, which is the VAT.
Can I get my tax back if I have stopped working?
If you have stopped working, you probably will have paid too much tax and will be entitled to a tax refund.
If you don’t do anything, you will receive an HMRC letter telling you how much they will refund.
If you want, you can use the form P50 to claim your income tax back, but only if you are not planning to go back to work or if you are not going to claim a state benefit, such as Universal Credit or Jobseekers’ Allowance.
Can I claim back National Insurance?
Yes, you can. Usually, if you had more than one job in a year, you probably have paid too much National Insurance. Then, you can claim back the overpayments.
IMPORTANT NOTE: If you are employed and self-employed, you will need to pay National Insurance twice, but the charges will be different and according to how much money you make.
How to contact HMRC?
The best way to resolve them is by contacting HMRC directly. To contact HMRC, you can use this phone number: 0300 200 330.
If you are going to call HMRC, make sure you have these pieces of information:
- Your full name, address, date of birth and National Insurance number;
- Details of each of your employers or pension providers, if that fits your case.
- Details of your last self-assessment tax return forms, if that fits your case.
After your call, it’s important to keep a note of:
- The date and time you talked to them;
- The name of the person you spoke to;
- What was said during the conversation - any pieces of information that can be valuable to get your case resolved.
IMPORTANT NOTE: HMRC will never call you, their communication is usually via letters. If you receive a call from HMRC it is probably a scam. Be careful and don’t give any personal information or make any payments.
Can I claim back council tax?
Yes, you can claim back council tax. Read more about this on our guide about How to Reclaim Overpaid Council Tax Refunds.
Can I claim back car tax?
Yes, you can claim back car tax. Read more about this on our guide about How car tax works?
What are the time limits for claiming back tax?
You have up to four years to claim back tax. Check some of these limits below:
- Tax year 2017/18 (year ended 5 April 2018): claim by 5 April 2022
- Tax year 2018/19 (year ended 5 April 2019): claim by 5 April 2023
- Tax year 2019/20 (year ended 5 April 2020): claim by 5 April 2024
- Tax year 2020/21 (year ended 5 April 2021): claim by 5 April 2025
- Tax year 2021/22 (year ended 5 April 2022): claim by 5 April 2026
What can I do if I am too late to claim a tax refund?
If you let these four years pass, you can still claim a tax refund via the Extra-statutory Concession B41, but only if there is a mistake made by the HMRC or another government department.