A tax rebate (also called a tax refund) is money you can claim from HMRC if you paid more taxes than what you owe. Many people get refunds after paying for expenses that HMRC lets you deduct from your taxes.
The Office of Budget Responsibility predicts that it will collect £282.5 billion in income taxes and £150.2 billion in National Insurance contributions for tax year 2021.
Yet there’s a 100% chance that not all of that money is rightfully theirs. With such a complex tax code, tens of thousands of UK taxpayers pay an incorrect amount of income tax ever year.
In fact, many pay more than they owe — without paying much attention to it — just to be safe and not underpay.
As a family-run business with over 10 years of experience, we at Tommystax are dedicated to winning you back your hard-earned cash while delivering industry-leading customer support. For example, you can often claim a travel tax refund if you pay your own way for business/employment travel.
Now, tax refunds can be confusing. Below, we’ll break down more information about tax rebates and how you can claim your tax back.
What is the Difference Between Tax Rebate and Tax Refund?
A tax refund is the amount of money you receive back from HMRC for paying more taxes than you owe. On the other hand, tax rebate refers to tax relief that you can claim as a taxpayer. This reduces your overall tax burden. However, most people use both terms interchangeably.
Scenarios That Can Lead to Tax Overpayments
Taxes seem to get more complicated every year. It’s difficult to pay the exact amount of tax you owe when you file your tax return, especially when you want to avoid underpaying.
As a result, several scenarios can lead to tax overpayments.
Improper Withholdings
If you don’t adjust your payment withholdings to accurately reflect your tax situation, you might have more withheld than you owe over the year. Many events can affect the taxes you’ll owe, such as earnings changes, starting a new job, getting married, or having a child.
Overestimating Your Quarterly Taxes
If you’re self-employed, you estimate your annual taxes owed for the year and make tax payments quartlery. For example, if you expect to owe £10,000 in taxes this year, you’d pay tax of £2,500 each quarter.
Estimating these with complete accuracy is nearly impossible unless you hire an accountant. Even then, most self-employed people pay more in taxes than they think they’ll owe to be safe.
Consequently, they often receive a tax fund from HMRC and other relevant tax authorities.
You’re Paying Unnecessarily Into National Insurance
Your employer might mistakenly withhold contributions for National Insurance from your paycheque, even if you’ve reached the age where you no longer have to. Doing so would lead to overpaying your taxes, resulting in a refund.
Tax Return Errors
Tax return errors can cause you to overpay taxes. For example, overstating your earnings on your tax return by accident will result in overpayment.
Another error that results in an overpayment is failing to take all allowable tax credits and deductions. This is especially common among self-employed people who must track their business expenses carefully to write off the correct amounts.
Being Given an Incorrect or Emergency Tax Code
You might overpay your taxes if HMRC assigns you the wrong tax code. You’ll pay tax under a different set of rules, which often leads to overpayment, and therefore a refund.
There are also emergency tax codes the HMRC may temporarily put you on when they aren’t sure how much you should be paying in taxes (such as when you start a new job).
You’ll often pay much more in taxes on an emergency tax code than what you owe. Consequently, you’ll likely qualify for a refund.
How Do I Know If I Paid Too Much Tax?
HMRC will send you a letter called a P800 (for employees) or a Simple Assessment Letter (for self assessment ) if you overpaid tax. It doesn’t send these out until tax season ends in April, so you can expect to receive yours around September.
If you didn’t receive a P800, you can see how much tax you paid using the government’s calculator. If you believe you overpaid after doing so, contact HMRC.
Additionally, your P800 may be incorrect. If you believe it is, check against your P60, P45, or P11D forms. Look at other paperwork relevant to your income and expenses as well. If it seems that you overpaid, you can contact the HMRC.
Am I Eligible to Get a Tax Refund?
You’re eligible for a tax refund if you pay more tax than you owe for the year. Your P800 will have instructions on how to claim your refund if eligible.
In some cases, you might be eligible without receiving the P800 — but only if you believe you overpaid your taxes. You’ll have to contact HMRC to claim your refund.
Can You Get a Tax Rebate After Losing Your Job?
Yes. The government will give you a tax rebate if you meet one of the following requirements:
- You’re looking for work and have been unemployed for four or more weeks.
- You don’t expect to go back to work.
- You return to full-time student status.
You might be able to claim your tax refund prior to the end of the year if you meet these requirements.
How Do You Claim a Tax Rebate?
Claiming your tax refund generally involves contacting the government. However, the exact process for claiming your rebate depends on the system through which you paid your taxes.
Types of Tax Rebates
There are two main types of tax rebates: PAYE and CIS. Additionally, there are several deductions and credits you may qualify for that could help you get a tax refund this year.
PAYE
PAYE stands for Pay-As-You-Earn. It’s how HMRC collects income taxes and National Insurance from your paycheck or pension income.
If you overpaid through PAYE, HMRC should automatically refund you the proper amount per your P800. You can claim your refund online if your P800 allows you too. Otherwise, HMRC will mail you a check.
If you believe you’re owed a refund, but don’t receive a P800, you can file a claim for your refund with HMRC.
CIS
CIS stands for Construction Industry Scheme. It’s the program under which construction contractors withhold funds from a subcontractor’s payment to remit to HMRC.
The easiest way to claim your CIS tax refund is through the government’s online form. You may also make your claim via post. You can learn how to do both on the government’s website.
Uniform Tax Rebates
You might be able to write off the cost of your uniform on your taxes as a deduction. For more information on uniform tax refunds click here.
Every industry has different uniform deduction requirements. In general, you need to meet the following criteria:
- You must pay income tax.
- The uniform must be specialised for your work.
- You must pay for the uniform and its upkeep out of pocket.
Food Tax Rebates
You might also be able to write off meal expenses if you save all your receipts. However, these meals must be purchased in the course of your job while travelling to qualify for a rebate. You can’t write off a meal you grab while at your main workplace.
Keep records of every qualifying expenses. Every penny you spend could count towards a larger tax refund.
Professional Fees and Subscriptions Tax Rebates
If you’re a part of any professional societies, or if you subscribe to any industry publications, you could get a tax rebate. They must be relevant to your job or business, though.
Tools/Equipment Tax Rebates
Many workers don’t realize that they can get a tax rebate for costs associated with the tools or equipment they use for work. You can write off the costs of repairs and upgrades to the tools, but not the initial purchase price.
The tools must be industry-relevant. Some examples include:
- Cutlery for chefs and kitchen staff
- Hand tools for carpenters, construction workers, etc.
- Cameras and accessories for photographers
What Information Do You Need to Claim Your Tax Rebate?
Some common paperwork you’ll need to claim your tax rebate include:
- P45 and/or P60 from your employer(s) or pension provider(s)
- P11D from your employer if you receive in-kind benefits
- Bank and/or building society statements
- Statutory interest paid as part of a PPI claim and any tax deducted from the interest
- Dividend certificates
- Rental income/expenses
Do I Have to Wait Until the End of the Year to Claim Tax Back?
You might be able to claim tax back before the end of the tax year only if you stopped working during the year and meet the following requirements:
- You’re looking for work and have been unemployed for four or more weeks.
- You don’t expect to go back to work.
- You return to full-time student status.
How Far Back Can I Claim a Tax Rebate?
You have four years from the end of the tax year for which you overpaid tax to claim your rebate. Tax years start on April 6th and end on April 5th the following year.
For example, if you are owed a rebate for tax year 2017, you’d have until April 5th, 2021 to claim it.
Tax Rebate Calculators
Here is our tax rebate calculator that you can use to figure your refund.
How Long Before I Get My Tax Refund?
If your P800 says you can claim your refund online, you’ll receive the refund payment in your bank account within about five days.
Otherwise, the government will send you a cheque in the mail if you don’t claim online within 45 days. Cheques for refund claims should arrive within 60 days of the date on your P800 letter.
If you haven’t been told you’re owed a refund, but you believe you overpaid, then the time it takes to receive your refund will vary.
How Do I Check the Status of My Tax Refund?
You can check the status of your tax refund by calling HMRC at 0300-200-3300.
Will COVID-19 Affect My Tax Refund?
COVID-19 is not likely to affect your tax refunds. HMRC has put structures in place to ensure they can pay out refund claims on time.
How Tommy's Tax Can Help You Get Your HMRC Tax Rebate?
You work so hard every day to make an honest living, yet the moment you receive your paycheque, the government takes a large share for itself. It would be nice to get some of that back, for once.
Yet claiming the money you’re owed can seem daunting with so many rules in place — whether you’re an employee or self-employed. HMRC might not get things right, and going back and forth with them isn’t fun.
With TommysTax, none of this is a worry. You simply need to:
- link your bank account
- upload your P60 (if you’re employed) or invoices (if self-employed)
- fill in any relevant expenses using either our site or mobile app
We’ll calculate and claim your refund for you.
You’ll get your tax refund within 72 hours of using TommysTax, and we’ll send the money directly to your linked account.
If you ever have any questions, we give you a dedicated personal tax assistant available 12 hours a day, 7 days a week to help out and give you all the details.
Claim back your hard-earned money today with TommysTax!
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