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HMRC tax refunds: What are they and how do you claim a rebate?

There are a number of tax refunds and allowances available to UK taxpayers, depending on their employment status and personal circumstances.

And while you may be automatically given a tax rebate, you may also be eligible for some refunds you aren’t aware of.

Here’s everything you need to know about HMRC tax refunds.

Summary

  • The most common reason for a tax rebate is when you have paid too much income tax

  • You can claim your tax refund online using the Government Gateway site

  • The amount of tax refund you receive is based on several factors

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What is a tax refund? 

Whether you’ve been overtaxed on your personal income or are eligible for certain tax benefits that can be refunded, you can get a tax refund (or a rebate) to get some of your money back.  

Although the tax system works efficiently the majority of the time, there will be occasions where errors occur and tax refunds become necessary.

So, it’s important to stay on top of your finances and understand your tax situation to ensure you’re not paying more than you should be.

If you do think you have overpaid, and haven’t yet received an automatic rebate, there is a process in place to help you claim your refund. 

How is your tax obligation calculated? 

The most common reason for a tax rebate is that you have paid too much income tax.

If you earn more than the £12,570 personal tax-free allowance, you will start paying income tax.  

But it’s not just income from employment that counts as personal income.

Everything from pension payments, income from life annuities and even interest on investments is considered ‘earned income’.

So even if you don’t earn a large basic salary, your other sources of income can make you eligible for higher rates of tax.  

With so many different sources of personal income eligible, HMRC relies on your employer to give you an accurate tax code and relies on you to fill in an accurate declaration form to work out how much tax you should be paying.

However, miscalculations do happen so it’s important to keep a close eye on your tax readings, especially if you’ve changed jobs during the tax year. 

What can you get a tax refund on 

You can get a refund on any taxable income you’ve paid taxes on, including: 

  • 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 
  • Job expenses, like working from home costs or clothing and tools for your job 

Am I eligible for a tax rebate?  

You are eligible for a tax rebate if you’ve overpaid any tax or have yet to claim certain tax refunds, such as a uniform tax refund.

To get a rebate on any taxes you have overpaid, you can claim in arrears of up to four years and can also notify HMRC of your allowance in advance to update your tax code for future earnings. 

You may also be eligible for certain refunds depending on your employment status, but you may need to pursue these refunds yourself.

From certain travel and accommodation costs all the way through to professional membership refunds, you may be eligible if you have to foot the costs of these employment-related job expenses.  

You can check the government website for full information on eligibility. 

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How to claim your tax rebate 

If you have received a P800 letting you know you are due a tax refund, you can easily claim this online using the Government Gateway.

The Government Gateway will take you through a few questions to check your eligibility before you can apply.

You’ll then be able to access your tax information and track your refund progress online. You’ll need to create a Government Gateway user ID here if you don’t already have one. 

If you’d prefer to speak to someone, there is a helpline available on the GOV.UK website, which includes postal support too.   

And if you are self-employed and complete an annual Self-Assessment, then you will need to complete your tax return before HMRC can process any rebate due.  

Even if you haven’t received a P800, you can still claim a tax refund by contacting HMRC directly through the online portal or by giving them a call.    

How much will I get back? 

Your tax refund is calculated based on several factors, such as income bracket, whether you work from home and if you’ve paid any expenses for equipment, vehicles or services as a result of your employment. 

Some allowances, such as clothing repairs or cleaning costs, depend on your income tax rate and how much you have spent.

For example, if you were to spend £50 per year on cleaning your work uniform, then you would be entitled to claim a tax rebate of 20% of this, or £10. 

When do you get it? 

You should receive a P800 at the end of every tax year and this should inform you of any refunds you are eligible for.

These are delivered to you automatically within around five working days, but you could also receive a cheque within around 14 days, although it can take longer.

If you are expecting a refund covering more than one year, you should receive one cheque. 

The process can take slightly longer if you have made a query in relation o your self-assessment.

The amount of time you should expect to hear back on your query can vary depending on your circumstances and the nature of your enquiry.

The government has a tracker to help and see how long the queues are.  

The tax system may be complicated, but with the expertise at your side, you could claim back refunds of sometimes hundreds of pounds.

Speak to an accountant and find out whether you’re eligible for a refund.

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About the author
Kate has written for leading publications and blue chip companies over the last 20 years.