February, 2011

7 Things You Should Know About Getting A Tax Rebate

Have you paid too much tax?

If so, you may be due a tax rebate.  The way to get a tax rebate depends on the reasons you have overpaid and on your current circumstances.  So, to find out whether you are eligible and how to claim a tax rebate, read our simple guide.

1. When you might be due a tax rebate

There are a number of reasons that you may have paid too much tax.  Some of the most common reasons are:

  • You had more than one job at the same time
  • You were only employed for part of the tax year
  • You went from working full time to part time
  • You changed from being employed to self-employed part way through the tax year
  • You were on an emergency tax code for a period
  • You were a student who only worked at holiday times

Often, your total tax will be wrong because your tax code is incorrect.  As your tax code is issued at the start of each tax year, it may be incorrect if any of your circumstances change.

2. How to claim a tax rebate for overpayments this year

There are different ways to claim your overpaid tax this year depending on your circumstances.

If you are an employee, you should write to your Tax Office explaining why you think you have paid too much tax.  You may have to send some documents to support your claim.  It is likely that any refund due will be paid to you via a change to your tax code.

If you have become unemployed or have retired, your claim depends on your circumstances.  This will include whether you are claiming any benefits, whether you are planning to take on a new job etc.

3. How to claim a tax rebate for overpayments in previous years

To claim a tax rebate for overpayments in previous years, you should write to your Tax Office. Explain why you believe you are owed a tax rebate and enclose supporting documentation such as your P60 or P45.

You have between four and six years to claim your rebate depending on the tax year your claim relates to.

Your Tax Office will look into your query, work out how much they owe you and send you a refund in the post.

4. How to claim a tax rebate if you’ve paid too much tax on your pension

If you pay tax on a company, personal or State Pension through PAYE (Pay As You Earn) there are several reasons why you might end up accidentally paying too much. For example, your pension provider may have used the wrong tax code or your other income may have reduced without HMRC knowing.

If you are receiving taxable pension income through PAYE and you find an error within the current tax year, contact your Tax Office. They will send a revised PAYE Coding Notice to your pension provider who will adjust the tax code to alter any further payments for that year.

5. How to claim a tax rebate if you’ve paid too much tax on your savings

If you are on a low income you may be eligible to receive your savings interest without any tax deducted.

Consequently, if you think you’ve paid too much tax on your interest you can claim it back. To do this you’ll need to fill in a R40 Tax Repayment Form for each year that you think you paid too much tax.  You have between four and six years to claim your rebate depending on the tax year your claim relates to.

6. How to claim a self assessment tax rebate

If you make a mistake on your tax return, you normally have 12 months from 31 January after the end of the tax year to correct it.  This is called an ‘amendment’.

If you filed a paper based tax return there is no special form for making an amendment.  You should write to your Tax Office and explain what the amendments.  Quote the relevant tax return page numbers and box numbers on the return.

If you filed your tax return online you can log in to Self Assessment and make an amendment online to your tax return – but only if it’s for the 2007-08 tax year or later. You’ll need to write to your Tax Office if you want to amend an online return for an earlier year.

You have between four and six years to claim your rebate depending on the tax year your claim relates to.

7. How to claim a tax rebate when you stop work

If you’ve just stopped working – if you have retired, returned to study of become unemployed – you may be able to claim back some of the tax you have paid.

If you’re claiming certain benefits (such as Jobseeker’s Allowance) you won’t be able to claim a tax refund straight away. This is because these benefits are taxable and affect any refund that you can claim.

If you start a new job within four weeks of finishing your old one, your new employer will pay any refund you’re entitled to with your pay from your new job.

If you have been unemployed for over four weeks, have returned to study or you have retired (and are not receiving a pension from your old employer) then you can claim a tax rebate by completing form P50 ‘Claiming tax back when you have stopped working’.

Non UK Resident?
Claim Your Tax Back

Record numbers of people submit tax return online

Have you submitted your 2009/10 tax return?

If so, you are likely to have joined a record number who filed their tax return online this year.  HM Revenue and Customs (HMRC) have revealed that a record 6.9 million people submitted their tax return online before the 31st January deadline – accounting for over three quarters of all returns for the last tax year.

Record numbers of Brits submitting tax returns online

According to the HMRC figures, a staggering 6,907,410 people had submitted an electronic tax return by midnight on the deadline (31st January) accounting for 78 per cent of all returns for the 2009/2010 tax year.  This figure was 7 per cent higher than the previous tax year.

The Daily Telegraph reports that ‘around 572,455 people left it until the last day to submit their form and avoid a £100 fine, making January 31 the busiest day of the year for using the online system.’

Whilst the deadline for paper tax returns is October 31st, taxpayers get an extra three months to file their tax return online.  Despite fines for late submission, around 10 per cent of people fail to get their form in on time.  There is a £100 fine for submission after the deadline, with a further £100 penalty if the return is not received by July 31st.  Interest on unpaid tax may also be payable.

Not all late returns will incur a penalty

If you have missed the tax return deadline, you are advised to send your completed form and any unpaid tax to HMRC as soon as possible.  However, the Daily Telegraph reports that, this year, not everyone who misses the deadline will necessarily incur a financial penalty.

For example, if you owe under £100 in tax and have filed your tax return late, you may avoid the £100 charge.  The Daily Telegraph reports that ‘under HMRC rules a penalty fine can’t be bigger than your outstanding tax bill.  So if your tax bill is just £50, this can be the maximum penalty charged. If you owe no tax at all, perhaps as a result of previous overpayments, then you will still be issued with a ‘penalty notice’ but the fine attached should be reduced to zero.’

Whilst this may help you avoid a fine in 2011, it won’t work next year as the rules are changing.  If you submit your tax return late next year, the £100 penalty will be applied – regardless of the amount of tax that you owe.