Jasmine Birtles
Your money-making expert. Financial journalist, TV and radio personality.
Are you due a tax refund? HMRC won’t tell you!
Reading Time: 5 minutesIf you’ve overpaid tax in the past, HMRC won’t tell you. It’s up to you to find out if you’re due a tax refund!
Tax refunds are more common than you think, but not everyone claims what they’re owed. Read on to make sure you don’t miss out.
- Why tax rebates happen
- How to get a tax refund
- Check the online gateway
- Ask your accountant
- Check if you can defer or cancel payments
- Claim a tax rebate on ‘payments on account’
- Do NOT use a company that claims to get you a refund
- More tips
Why tax refunds happen
Tax rebates are far more common than you might think. You just don’t hear about them because HMRC try not to shout about it!
Some of the most common reasons you might be due a tax refund are:
- You started a new job and were taxed under an emergency code at the beginning.
- HMRC sent the wrong tax code to your employer or your employer does not use the correct code. This can often go back many years, so it’s worth checking retrospectively. You never know, you might be due a tax refund from 10 years ago or even longer!
- You’re a pensioner with more than one workplace pension. Your tax-free personal allowances may not have been allocated properly, meaning you might have paid too much tax.
- You have more than one job. The employer at your second job will automatically deduct tax at basic rate so you may not get the benefit of all your tax-free personal allowances. This regularly affects students and low paid workers, who could really do with the tax refund.
If you think any of these circumstances might apply to you then make sure you check if you’re eligible for a refund. And if you are, make sure you claim it!
How to get your tax refund
This is the bit everyone is dying to know. Getting your refund may sound like a complicated process, but in reality it’s very straight forward.
You should be able to do it online, without wasting hours and hours trying to make sense of the whole system. Although, if your tax affairs are more complex it might take a bit longer.
It’s really important to get it right and you could end up with a large cheque at the end of it, so make sure not to rush the process and do it properly.
Remember: asking HMRC to investigate your tax code or tax liabilities could mean they discover you actually owe MORE tax. So, be prepared for this to happen, too!
Check the HMRC online gateway
The first place to check is the government’s online gateway. If you don’t have your online portal set up yet, it can take a bit of time. You’ll need to prove your identity online and wait for a unique code to be sent to you in the post to complete the application.
You can claim your rebate here.
This portal helps you find out if you can claim a tax rebate if you paid too much due to any of the following reasons:
- Pay from your current or previous job
- Pension payments
- Income from a life or pension annuity
- A redundancy payment
- A self-assessment tax return
- Interest from savings or PPI
- Foreign income
- UK income if you live abroad
- Fuel costs or work clothing for your job
If you think you’re owed a refund for any other reason, read on…
Ask your accountant
If in doubt, ask a professional.
Asking an accountant will be a particularly good idea if you’re self-employed, have a second job, or have income from something else (like a buy-to-let property). Paying tax as a self-employed individual is much more complex, so taking advice can be a really good idea.
An accountant will probably charge you a couple of hundred pounds for their basic service, including a self assessment tax return.
A good accountant will likely spot where you can save WAY more than that on your return, so it’s always worth investing in. There’s a high chance they’ll successfully get you a tax rebate too, so you could well end up with more money than if you didn’t hire them in the first place.
Just make sure you find a reputable accountant. Sadly, some unscrupulous businesses and individuals try to take advantage of those desperate for a tax rebate.
Check online reviews before committing to an accountant or ask your friends and family for recommendations. That way, you’re far more likely to end up with a good accountant who wants to help you.
Check if you can defer or cancel payments on account
If you’re self-employed you may be able to defer or cancel payments on account. This will apply to you if you’ve earnt less this year than you originally predicted, or less than you made last year.
Another reason you might be apply to defer payments is if your tax relief entitlements go up. This would mean that the amount you owe is less than you would have expected when you made your original payments on account.
You can apply to reduce or defer your payments on account here. If you’re struggling with the online form, you can fill it out manually and post it to HMRC.
Claim a tax rebate on payments on account
You may be able to claim a tax rebate on payments on account from last year if you’ve earned less than anticipated this year. With many self-employed people seeing a decrease in earnings due to Covid-19 lockdowns, the likelihood you’ve overpaid your tax is significantly higher.
If your earnings have fallen below expectations, your previous payments may have been too high. This can be corrected before you pay the tax, by making a claim to HMRC to reduce your payments.
A lot of people don’t do this because their income is uncertain and it’s hard to plan ahead. Don’t worry if this is the case. If your final tax bill turns out to be less than the tax you have actually paid you can claim a tax rebate.
Pros and Cons of using a company that claims to get you a refund
PROS
Everything will be done for you and will save you a huge amount of work and admin.
Time saving.
CONS
These companies may seem tempting, particularly if you’re feeling overwhelmed and are worried about claiming your refund. Don’t fall for their clever marketing and be very careful who you select. Some will deliberately make the process seem more complicated than it is to try and get your business. All they’ll actually do is take a huge cut of any refund you get.
They won’t do anything you can’t do yourself through the HMRC portal. Doing it yourself means you’ll end up with the full refund in your pocket and won’t have to share any of it with any third parties.
Alot of these companies will charge you almost as much as you’re owed from HMRC, so you’ll barely see a penny of YOUR refund.
Remember – if something seems too good to be true, it probably is. You can almost certainly achieve a better outcome on your own.
More like this…
If you found this article useful you might also like these.
- Self Assessment Online – The Definitive Guide
- Second Job and Side Hustle Taxes Explained
- Help to Save: £1200 Tax-Free Cash From the Government
I’m gonna try this and hope I don’t owe more
Interesting to know this.
Definitely worth chasing up. I got a couple of hundred quid I was owed.