How to claim back overpaid tax

“Nothing is certain except death and taxes,” said Benjamin Franklin. We cannot do much about the former, but we can certainly ensure that we are not paying too much tax.

Why you might have overpaid tax

The most likely reason you may have overpaid in the PAYE scheme is because of an issue with your tax code. It may not accurately reflect your current entitlements. Alternatively, you may have moved jobs during the tax year, and this can mean your current employer did not have accurate details about your circumstances.

Consult with HMRC online

Students are another group who should keep an eye on their tax deductions. The government offers information on its own website about claiming refunds that you may be owed.

Getting your refund

If you are due a refund, HMRC will let you know via a P800 or a PA302 letter. For the last tax year, these letters would have been sent out after the beginning of September. If the communication tells you that it is possible to claim online, you should do so. The money could be in your account within five working days.

Alternatively, HMRC will send you a cheque within six to seven weeks.

If you think you have paid too much tax, you can check online at www.gov.uk/check-income-tax-last-year.

If your tax is calculated through the self-assessment scheme, any repayments due to you will be calculated once the form has been received by HMRC. You may be due a repayment if your income has gone down, and any payments you have made have exceeded your liability.

If you’ve underpaid instead

Underpaid

You can nominate an account for any repayments to be made on the form or offset it against any other liability, such as VAT or any repayments you are making against a previous year.

It should be noted that HMRC do make mistakes, so you may want to let your tax adviser look at any documentation you have received. You may have a business where your income is seasonal and fluctuates due to local events. Accountants in Cheltenham, such as those found at www.randall-payne.co.uk will be able to offer expert advice.

You may, of course, have underpaid your tax for the year. If so, HMRC must notify you within 12 months. Otherwise, you may apply for the claim to be dropped. Any payments due to HMRC can be spread over a few years.

Summary

This article explains common reasons people overpay tax through PAYE, such as an incorrect tax code or a job change during the year, and describes how to check and claim a refund via HMRC online or by post. It also covers what happens if you’ve underpaid tax and how repayments can be arranged.

Questions this article raises

• How long does HMRC typically take to process an online tax refund claim?
• What should you do if you disagree with HMRC’s tax code assessment?
• How far back can you claim an overpaid tax refund?