According to the most recent labour force survey, nearly 29 million workers were unemployed between February and April. Certainly, this is a stressful time for many, and the thought of filing a tax return may seem like a pointless endeavor.
But despite your misgivings, it is highly likely that if you have been out of work for any length of time, you are due some tax back as your annual tax allowance would not have been calculated correctly. Tax refunds can provide you with this much needed boost in your income. But only if you apply.
This article will attempt to address a variety of scenarios in which you could find yourself receiving a tax refund.
Timing makes a difference.
Although nearly everyone who became unemployed in 2009 is eligible for a tax refund, the longer you’ve been without work will increase the likelihood of receiving, and the amount of, your tax refund.
First things first
If you were working for any part of 2009, make sure your employer has given you a form P45. Your P45 will show much you have earned and paid in tax. Add to your income and JSA you received between the date you lost your job and April 5th 2010
If you leave at the very end of the tax year, you should be given a P45 on leaving and, by 31 May, a P60.
Form P45 is in four parts. Part 1 will be kept by your old employer who will give the other parts to you. Part 1A is for you to keep safely as your record of pay and tax taken off. Parts 2 and 3 are for your new employer if you start to work again or claim Jobseeker’s Allowance or contributory Employment and Support Allowance.
I will not be working again during the tax year
Typically if you’ve been out of work for some time, your tax refund would be paid when you started working again. However in a situation where you can show you would not be working again in the tax year, such as if you’ve retired or become a full-time student, you can claim a refund immediately. You should write to your tax office and ask for a final calculation or alternatively you can complete a claim form P50 which you can download from the HMRC website at www.hmrc.gov.uk.
I am claiming Jobseeker’s Allowance or Contributory Employment and Support Allowance
You will have to give the P45 to the Jobcentre Plus office. If you start work again before the end of the tax year, Jobcentre Plus will give you a P45U or P45ESA which includes details of the taxable benefit you have received as well as the normal P45 details.
I am unemployed and claim benefits
You cannot normally claim a tax refund immediately. You will either get a refund automatically under PAYE if you go back to work, or at the end of the financial year, whichever is sooner.
I am temporarily on short-time working
Your employer should make whatever tax refund you are entitled to on your normal paydays.
I am on strike or involved in a trade dispute
You will not be able to claim a tax refund whilst on strike. Instead, you will have to wait for a refund under PAYE – in other words when you either leave the job or return to work. If you are still on strike at the end of the tax year, you will not get a refund until you leave the job, or return to work. However, your employer will give you your P60 which will show the refund which is due as if it had been paid. Your employer must also give you an additional note saying how much tax refund under PAYE is being withheld until you leave or return to work.
Any more questions? We are happy to help. Alternatively, why not apply for some expert help with your tax return?