If you think you have paid too much tax getting your money back should be a top priority.
Here is how to find out if you have paid too much tax and what you need to do to get your money back as quickly as possible:
Have I paid too much tax?
Your employer or pension provider use the tax code you are allocated by HMRC to determine how much tax you should be paying.
If your tax code is not correct you could be paying too much or too little tax so it is important to check they have it right.
Is it free to claim tax back?
Yes, it is completely free to claim tax back from HMRC.
There are companies that offer to reclaim tax overpayments on your behalf in exchange for a cut of your rebate. However, because it is relatively easy to claim tax back yourself you should only consider using one if you do not think you will claim on your own.
The exception to this is if you have very complex tax affairs, in this case it is likely to be sensible to get advice from a qualified accountant.
What is my personal allowance?
The personal allowance is due to increase to £11,000 from April 2016.
Income Tax is taken from the money you earn each year, but everyone can earn a certain amount of money before paying tax, this is called your annual personal allowance.
The personal allowance has increased to £10,600 for the 2015-16 tax year, a figure which begins to dwindle once you start earning over £100,000 in income.
For those of you born before the 6th April 1938, there are currently three levels of personal allowance available to you based on your income:
|£0 - £27,699||£10,660|
|£27,700 - £27,819||£10,6601|
|£27,820 - £100,000||£10,600|
If you earn over a set amount, your tax free personal allowance is gradually withdrawn.
However, although this system works relatively well for someone working in one full time job with a fixed rate of pay, if you do not fit that bill it is easy to end the year having paid too much tax.
Most people pay Income Tax through the PAYE (Pay As You Earn) system, which deducts tax from your salary before it is paid into your account.
PAYE uses a tax code to calculate how much tax you should pay and generally works well if you are paid the same amount every month.
However, if your pay fluctuates you could end up paying more tax than you need to.
Equally if you are not employed for the full 12 months of the year, perhaps due to the seasonal nature of your job, unemployment or study, you may not get the full benefit of your personal allowance and as a result pay too much Income Tax.
Previous tax years
If you think that you may have paid too much Income Tax in previous years you may still be able to claim a refund, you have 4 years to make a backdated claim.
To reclaim tax for earlier tax years you will need your P60 and P45 forms and details of your employment and benefit history for the relevant tax years.
Once you have all your details, contact your local tax office and they will review your claim and send you a refund by post.
To get an estimate of whether you have paid too much tax or to see if it would be worthwhile asking for a rebate, use the HMRC Tax Checker.
You have 4 years to submit a claim for a Self Assessment refund and cannot claim for overpayments beyond this date.
If you think you have overpaid tax through your Self Assessment tax return you can make a claim for a refund in much the same way as through PAYE.
If you want to claim a refund, or correct a mistake on your Self Assessment tax return within 12 months of submitting it you can complete an amendment.
This means either writing to the HMRC detailing the changes, or completing an amendment on the HMRC website.
If you need to claim for a refund from a Self Assessment made over 12 months ago you will need to make a claim in writing and include the following information;
Tax year of your overpayment
Why you have paid too much tax
Evidence of the tax that has been paid*
Copy of your signature
How you would like to receive any repayment due
For more information on how to correct your Self Assessment tax return visit the following:
Paid too much tax on your pension
If you pay tax on your personal, company or state pension through the PAYE system there is a chance that you could have paid too much.
This could be because you have been allocated the wrong tax code, because your entitlement to benefits has changed or for a number of other reasons.
Reclaiming the tax you pay on your pension is similar to reclaiming Income Tax from employment; you will need:
Full pension and benefit payments information
You will then need to contact HMRC and request an assessment of your tax contributions and any repayment due will be sent to you through the post.
Paid too much tax on your savings
If you should not be paying tax on your savings, perhaps you earn below your annual Personal Allowance, you can reclaim the tax that has already been deducted from your account.
Most standard savings accounts automatically deduct tax from you interest before the money is paid into your account.
Unless your money is held in an ISA or you have informed your savings provider that you do not pay tax by completing an R85 form, it is likely you are paying tax on your savings interest.
You have up to 5 years to reclaim tax paid on savings interest, which you can do by completing a R40 form and contacting your tax office.
I have stopped working - can I get my tax back?
If you have worked for several months of the year and have stopped then there is a good chance you will have paid too much tax.
If you have no plans to claim Job Seekers allowance or to work again this financial year you can complete a P50 form to reclaim your tax so you receive the full benefit of your personal allowance.
Paid too much National Insurance
If you have had several jobs in a year there is a chance you may have paid too much National Insurance as well as too much Income Tax. If this is the case then in certain circumstances you may be able to claim back your overpayments.
How long do you have?
The only other exception is when your self-employed earnings fall below the annual small earning exception limit - in this case you must apply in writing for a refund by 31st January of the following tax year.
There is no time limit on when you can reclaim overpaid National Insurance contributions if:
you have worked in two jobs and made contributions on both
being both employed and self employed resulted in the overpayment
you have not paid enough voluntary contributions to count for a qualifying state pension year
If you have wrongly paid or overpaid National Insurance for any other reason there is usually a six year time limit on claims.
How do I make a claim?
The type of National Insurance that you need to reclaim will dictate how you should complete your claim for a refund.
Visit the DirectGov website to find the forms you need to claim.