Claiming tax refund

No one wants to pay too much tax, but there are situations when that might happen. If you think you've overpaid tax, this is how you should go about claiming a tax refund.

Learn more about claiming a tax refund, with help from The Mix

What should I do if I think I’ve paid too much tax?

If you’re thinking about claiming tax refund, the process is pretty straightforward. Firstly, you should enter how much pay you’ve received and how much tax was deducted on HM Revenue & Customs’ (HMRC) tax checker here to estimate if you’ve paid too much tax, and if so, how much.

The tax checker also shows how the tax you owe was calculated. If you’re due a refund (which does happen!), you should contact HMRC.

How long will it take to get a tax refund?

If you’re claiming tax refund, the amount you’re owed will either be paid straight into your bank account or sent as a cheque. A payment into your bank account will take a few working days, but a cheque could take up to five weeks to arrive.

Of course, this assumes that the tax office has all the information it needs to pay the refund. If your employer hasn’t sent your payment and tax details in, the tax office may need to write to them to get that information. If you haven’t received a refund within five weeks, contact the tax office again.

I got taxed in a previous job, but I’ve lost my payslips!

If you haven’t been given any payslips or you’ve lost them, your employer needs to let the tax office know what date you finished your job. If this hasn’t happened, you’ll need to contact the tax office or HMRC Enquiry Centre so that your employer can be asked to provide the relevant information.

How do I know if I’m on the right tax code?

You will find your tax code on your payslip. Read more about Pay As Your Earn and tax codes here. If you think you’re on the wrong tax code, you need to contact your tax office as soon as possible.

If you’ve lost your P45 (given to you by your employer when you stop working) or your payslips and you want to find out what your tax code is, you’ll need to give the tax office your National Insurance number, and if possible, a tax reference number. Until your employer gets the correct code they will use an emergency tax code.

Learn more about national insurance contributions here.

Why would I be put on an emergency tax code?

If you start a new job before you’ve been given your P45 from a previous job, you may be put onto an emergency tax code. Other times when you might be put on it include:

  • You’ve started a new job but you’ve had another job or received taxable state benefits during the year.
  • You’ve started a new job and were previously self-employed.
  • There’s been a change in your tax code during the year because, for example, you’ve started to get company benefits.

Sometimes your employer will have to put you on an ’emergency’ or ‘special basis’ tax code until HMRC has worked out what your correct tax code for the year should be. This usually happens when HMRC doesn’t know enough about your income or tax details for the full tax year.

Like many other codes, the emergency tax code is a number followed by the letter L. If this is your first job, you should be put onto what’s called a ‘cumulative’ emergency tax code. This means your tax should be correct by the end of the tax year.

If you’ve already had a job, you’ll probably be put onto a ‘week 1’ or ‘month 1’ code. The problem with that is that you may have paid too much (or too little) tax by the end of the year.

An emergency code will probably be used if you have had other earnings in the tax year but haven’t got a P45 to give your new employer. If you’re on an emergency tax code, get in touch with your tax office and they will arrange to get this put right.

Do I need to pay tax on the interest earned on my savings?

Most people can earn interest on their savings tax-free, thanks to the personal savings allowance. Basic-rate taxpayers can get up to £1,000 in interest tax-free. If you earn more than £1,000 from your savings in a tax year – which isn’t very likely – you will be hit with the dreaded income tax. Head here to learn more about income tax.

Higher-rate taxpayers have an allowance of £500 a year, while the very rich (those earning more than £150,000) do not receive a tax-free allowance at all.

How can I get the help I need?

HMRC encourages people to ring or use their webchat function if they have a query around claiming tax refund. Make sure you keep a note of what was said – if you do something wrong, it may be down to you to show that you were acting on the advice of an employee of HMRC.

Next Steps

  • The Money Helper offers free, unbiased and independent advice about all financial matters. 0800 138 7777
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money rights| tax

By Holly Turner

Updated on 25-Jun-2021

Photo of a girl on the phone by Shutterstock.