Tax Refunds

You may have heard people around you rejoicing over their extra money paid into their accounts for a tax refund. Whilst it seems great that people are getting an extra few £100’s in their bank accounts this is what they are owed and should have already received.

These refunds are being paid to those who have in some form, overpaid on tax.

 

Overpayment Through Employment or Pension

One of the most common reasons for receiving a tax refund is an overpayment on tax deducted from your income, either through employment or a pension. This overpayment may have occurred because HMRC assigned you the wrong tax code. Your tax code determines how much tax is deducted from your earnings, so if it's incorrect, you might pay more tax than necessary.

For instance, if you switched jobs or started receiving a pension, your tax code might not have been updated to reflect your new circumstances, leading to an overpayment. Similarly, if you had multiple jobs, your tax-free personal allowance might not have been allocated correctly, causing you to pay more tax than you owe.

 

Self-Assessment Overpayment

Another reason for a tax refund could be overpayment through self-assessment. If you're self-employed or have other sources of income, you may be required to complete a self-assessment tax return. After submitting your return, if it turns out you overestimated your income or failed to claim all the tax reliefs you're entitled to, you could end up paying too much tax. In such cases, HMRC will process the information and issue a refund for the overpaid amount.

 

Checking If You're Owed a Refund

If you suspect you've overpaid tax, you can check through the UK government’s website. By signing into or creating a personal tax account, you can review your tax records and determine if you're due a refund.

HMRC typically sends out letters by the 30th of November to those eligible for a refund. If you don't receive a letter, it's likely that your tax payments were correct.