With the economy showing signs of weakening again, many companies are making the decision to lay off workers and many people across the country and becoming unemployed. A saving grace may be help you if you become unemployed as you often can claim a tax rebate as you will not receive your full tax free allowance. Read this article to learn more:
Each year everyone that works in the UK is given a tax free allowance. The current tax free allowance for the 2010/2011 is £6,475 and it will increase £1,000 to £7,475 at the start of the new tax year.
Your tax allowance is allocated through your tax code and is usually given to you evenly throughout the year. You will normally receive your full tax allowance if you work for the full year but problems start to occur if you stop working such as when you loose your job and become unemployed.
If for example you earned £2000 a month and were made unemployed at the start of July you would have only earned about £6000 for the tax year so far but will have paid tax as if you were working for the whole year. If you are unable to find another job you will be able to claim back all of the tax that you paid.
One thing to remember is that if you receive any job seekers allowance this will count as income and will need to be added to your pay before you calculate your tax rebate. Keep your P45 safe and at the end of the tax year check to see if you are due any rebate.