Published on March 4th at 2:24pm by Different Money Team
Most employed people will be on the ‘Pay As You Earn’ (PAYE) payroll system which essentially uses a tax code specific to you, to determine and sort out your income and National Insurance taxes every month and deduct them from your wage packet. Others – such as the self-employed – will pay tax through self-assessment and complete a tax return, while some pensions and savings accounts can also be taxed.
While tax payment is on the whole a very organised and well-governed operation, it isn’t without fault, which in turn means that every year many of us can find ourselves paying too much tax.
The good news is you can get this money back, it’s free to claim by yourself and it isn’t as difficult as you might think…
Why Does Overpayment Happen?
Before we get started, you may be wondering why these overpayment mistakes and errors can creep into something as important as your taxes.
There are several reasons; here are some of the most common:
- If you started a new job you may have been placed on an emergency tax code for a time
- If you were only working for part of the tax year
- If you have had more than one employer across the tax year
- If your earnings change a number of times
- If you have more than two jobs at once.
In any of these circumstances, there is potential for you to have overpaid taxes – particularly if you were unaware of emergency tax, which often catches people out.
So, how can you claim this money back?
How to ClaimYour Tax Back Step-by-Step
Step 1 - Are You Eligible?
Firstly, you need to check if you are able to make a claim. If you have worked in the UK and are a UK resident then you shouldn’t face any issues, and even if you have worked in the UK but no longer live here you can still make a claim up
to a certain period of time.
Step 2 – The Right Time
April 5th is the end of the tax year and it is after this point you can claim for the previous year, providing you are still in work. Also for previous tax years, you can make a claim at any time during the current financial year. Those who are no longer working can also claim at any point.
Step 3 – The Relevant Documents
There are certain documents you need to have in order to make a successful claim. Firstly you need your recent payslips and National Insurance details.
You’ll also need a P45 and a P60 for each job during the tax year you wish to claim for – you can ask your employers to source these for you if you cannot find them.
To claim back on savings income, you need the R40 form which you can find online here .
Step 4 – Getting in Contact
You could go through an agency, but they will take a percentage of your repayment as compensation for their services, so it’s worth doing this yourself.
You then need to contact HM Revenue and Customs (HMRC) or your local tax office and request a tax assessment in order to claim a refund, supplying them with the relevant documents listed in step three. This process can be used for income tax, pensions and National Insurance refund claims.
If your claim is through self-assessment, you can also contact HMRC and detail the relevant information to make any corrections.
When claiming on savings interest, you need to supply the HMRC with your complete R40 as well as the relevant details about the extent of your claim.
Step 5 – The Waiting Game
If you have done step 4 by yourself, you simply need to wait. If you are successful you will receive your tax refund as a cheque. If you have gone about this process through an agency you will often have the money transferred into one of your accounts, minus their charges of course.