During the next few weeks, people throughout the country will receive a P60. This document provides a statement of the amount of tax you have contributed to Alistair Darling’s coffers throughout the past 12 months.

Over £300,000,000 goes unclaimed in overpaid tax each year. Receiving your P60 is the perfect time to ensure you haven’t given the government an interest free loan.

What causes an Overpayment of Tax?

If you were in continuous employment over the past 12 months, you most likely paid the correct amount of tax. However, errors can often occur when people switch jobs, or are made redundant.

A report by PricewaterHouse Cooper states that last year 62% of companies cut staff, this coupled with a number of high street brands going into liquidation, could result in more people becoming eligible for a tax refund.

Other reasons you could have overpaid tax include:

• Leaving the UK part way through the tax year
• Earning below the tax free allowance (currently £6,475)
• Being on an emergency tax code
• Retiring from work

How to Calculate Your Tax Refund

Your P60 should look similar to the image below:

To calculate whether you paid too much tax, note your total pay for the year and the total tax deducted from your wages and Input these two amounts into an online tax calculator. Then press ‘calculate’ and this should show you instantly whether you paid too much tax.

In the second part of this blog series we will show you how to claim back any refund for yourself from HM Customs and Revenue.

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