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Can you claim a tax rebate?

Posted 08 June 2016

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Learn how tax rebates work and if you’re entitled to one.

Income tax: most of us have to pay it and for most of us it’s collected via PAYE and we don’t pay much attention to it.  But what if your circumstances change and you find you’ve paid too much tax?  Then you might be due a tax rebate – but how do you go about getting one?

Here we’re going to look at how tax rebates work and when you might be entitled to one. 

What is a tax rebate?

A tax rebate is when HMRC (Her Majesty’s Revenue and Customs) gives you back some of the money you’ve paid in income tax because you’ve paid too much, or because your circumstances have changed. 

Here are some situations that can lead to you getting a tax rebate:

• if you’re employed and had too much tax taken from your wages,

• if you’ve stopped work,

• if you’ve paid too much tax on your pension payments,

• if there’s a mistake on your tax return (if you do one),

• if you’ve paid tax on savings interest and you’re on a low income, or

• if you earn an income in another country.

If you’re in work

Sometimes people have too much money taken from their wages if their tax code is wrong. Your tax code simply tells your employer how much money to take from your earnings and send to HMRC. You can find your tax code on your payslip – 1100L is one of the most common tax codes for the 2016-17 tax year, for example. 

If you believe your tax code is wrong, you should get in touch with HMRC and let them know – click here for more info on how to do this. You can only make a claim for a tax rebate going back the last four years. 

HMRC will correct your tax code if it’s wrong for the current tax year and you will get your refund in your wages. If they discover that your code is wrong going back previous tax years, they will send you a P800 tax calculation letter. Bear in mind that you can also receive this letter if you haven’t paid enough tax. 

If you’ve received the P800 form and it turns out you have overpaid, you should receive a cheque within 14 days – you don’t have to do anything yourself to get your money back. 

If you’ve stopped work

You might have overpaid tax if you’ve stopped work because you were made redundant. Contact HMRC and let them now about your redundancy. 

You also might be entitled to a rebate if you left your job, but you won’t be able to claim a refund straight away if you’re receiving:

• Jobseeker’s Allowance,

• Employment and Support allowance,

• Carer’s Allowance, or

• Incapacity Benefit.

You need to give your Jobcentre parts 2 and 3 of your P45 form (this is the form that your employer will give you when you leave showing your tax details). If you’ve overpaid you’ll get the money back at the end of the tax year, or when you start a new job. 

If there’s a mistake on your tax return

You might be able to claim a tax rebate if you need to make a change to your tax return after you filed it, or because you put the wrong amount in when you were completing your self-assessment. 

If you completed your tax return online, you need to log into your account and request a payment. If you completed your tax return on paper, you can contact HMRC via the phone or post and explain why you think you’ve overpaid tax. 

From this point, HMRC will tell you whether you are due a refund or not. If you are, you will either receive this straight into your bank account or as a cheque. 

Earning money in a country other than the UK means your tax is worked out differently. If this applies to you, have a look at this Government page

Tax rebates and pensions

If you’ve paid too much tax on your pension, one of two things will happen: either your pension provider will pay you back automatically, or you’ll receive the P800 letter from HMRC that we mentioned earlier. If you think you’ve overpaid and neither of these things have happened, just get in contact with HMRC. 

Again in this instance, you’ll normally get a cheque within 14 days. 

There are other cases where you might be entitled to a tax rebate – for example if you’ve taken a lump sum or cash from your pension pot or you’ve bought an annuity. What happens in each of these cases differs slightly, so make sure you have a look at this Government page for full details. 

Beware of emails about tax rebates

HMRC will never send you an email telling you about a tax rebate, so if you receive one of these, treat it with caution. It is most probably a scam email that wants you to click on a link or download an attachment and enter your personal information. Your details will then be in the hands of criminals.

If you’ve received one of these emails you can report it at Action Fraud

Remember, there are lots more info on our blog about how to manage your money and you can get further free and impartial help from the Money Advice Service

by Christine Walsh

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To find out more about managing your money and getting free debt advice, visit Money Advice Service, an independent service set up to help people manage their money.