Making even a small mistake on your tax return can cost you a fortune. Failing to claim reliefs or expenses can lead to you paying more tax than you need to and if you haven’t spotted these errors you could end up making the same mistakes year after year.
If you haven’t checked the following five items correctly, you could be due a tax rebate. Keep reading to find out more.
Your tax code
One of the most common reasons that you will pay too much tax is if you have the wrong tax code. This can often happen if you have changed jobs, if you have more than one job or if you pay tax on other income through PAYE. And, if you have company benefits it can also result in the wrong tax code.
If other income that has been taxed through PAYE has changed you should let HMRC know as you may have been paying too much tax. And, always provide your P45 to your new employer as quickly as you can to avoid ending up on an emergency tax rate.
Your pension contributions
Pension contributions attract tax relief. This means that either your pension fund is boosted or your tax bill is reduced.
It is important that you properly report every pension payment to HMRC. If you pay your contributions through PAYE then your tax may be correct, However, if you are self employed or you pay into a private pension you should keep HMRC informed of all your contributions.
If you incur expenses as part of your work then you should declare these. If you don’t, you may end up paying too much tax and you could be due a tax rebate.
This is especially true if you are self-employed. Make sure that you record and claim all expenses incurred in your line of work including tools, supplies and travel expenses incurred as part of your business.
Remember that you can only claim expenses which were incurred wholly or mainly during the course of carrying out your business.
Your donations to charity
The UK’s Gift Aid scheme boosts your charitable donations by 25 per cent.
For example, if you donate £50 to a charity, then the charity gets £62.50 – equivalent to your £50 plus £12.50 of Gift Aid. And, if you are a higher-rate taxpayer, you can reclaim a tax rebate of a fifth (20 per cent) of the total gift, which comes to £12.50 in this example.
Remember to declare all your charitable donations to HMRC, especially those made outside of Gift Aid.
Your previous tax returns
If you haven’t checked your previous tax returns correctly or you have made mistakes you could be continuing to make the same errors year after year.
It is worth looking over your previous tax returns to see if there are any mistakes that may result in a tax rebate. There is a standard limit of four years from the end of the tax year for making claims for repayments of tax.