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How to Claim a Tax Refund

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Last editedFeb 20222 min read

Have you paid the government too much tax? You could be eligible to claim it back as a refund. The proper procedure to claim tax refunds will depend on the type of tax paid, the timing of your payments, and which year you need a refund for. Here’s how to claim a tax refund from HMRC.

Claim a tax refund for the current year

If you are an employee receiving wages or a salary from your employer, you’ll be taxed through the PAYE system. In most cases, any overpayment through PAYE simply means that you’re using the wrong tax code. The first step should be to log into your personal tax account and verify your code, notifying HMRC if there are any changes to your circumstances. After you’ve done this, there’s no need to submit a tax refund claim. Instead, the overpaid tax will be automatically refunded and added to your future paycheque.

The system works a bit differently for those who are self-employed, because rather than using PAYE you’ll be paying income tax through self-assessment. This involves making two payments on account throughout the tax year to cover your future tax liability, which can lead to overpayment.

For example, if your income falls in comparison to last year’s figures and you’ve been keeping up with payments on account, you’ll be due a refund. This will be automatically paid into the bank account of your choice after you’ve filed your current self-assessment – there’s no need to file a separate tax refund claim.

Claim a tax refund for previous years

While it’s an easy, automatic online process for those who need a refund for the current year, what if you feel you’ve overpaid in the past? Those paid through PAYE will need to fill out a P800 form, giving details of past income, tax liability, and the amount overpaid or underpaid. After you’ve submitted the P800, you’ll receive instructions about how to receive your refund, whether it’s through an automatic cheque in the mail or an online claim. 

Before contacting HMRC or filling out the P800, you should first be sure that all your income calculations are correct. It might be worth hiring an accountant in this case to get your bills in order before you ask for a refund. There’s a statute of limitations for claiming a tax refund. You must file your claim within four years of the tax year’s end.

How to file a Corporate Tax refund claim

Now that we’ve covered how individuals can claim tax refunds, what about companies? If you file a Company Tax Return you can use this document to notify HMRC that you’ve overpaid. The online form includes space for bank details, which allows HMRC to automatically process your claim and transfer your refund. If you don’t include your banking details, the refunded money will be used to offset other company taxes such as VAT or PAYE. It could also be offset against your next Corporation Tax bill.

Claim tax refund online with Making Tax Digital

The government is moving away from paper-based tax filing and communication, transitioning instead to a Making Tax Digital system. This includes keeping digital records and an online platform for sending information directly to HMRC. Ultimately, rather than filing a self-assessment return at the end of the tax year, you can instead send your financial details to HMRC at regular intervals to keep your records current. This will also make it easier to claim a tax refund online and automatically.

The bottom line is that with tax filing moved online, it’s now easier than ever to file and claim tax refunds. Whether you’re paid via PAYE or own your business, you should be able to easily access your records and contact HMRC with any questions regarding your refund.

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