HMRC owes refunds to millions. Here’s how to get yours

Esther Shaw examines the reasons why you may be in line for a tax rebate and the best ways to ensure it’s repaid

None of us wants to give more money to the taxman than we absolutely have to – yet it is estimated that millions of people are paying too much tax every year, owing to things such as having the wrong Pay As You Earn tax code, or being eligible to claim certain tax breaks or benefits.

In certain circumstances, HM Revenue & Customs will issue a rebate, without you having to do anything. But in others, you will need to check and apply for a refund yourself.

In some cases, completing a self - assessment tax return will trigger the tax refund – even if you don’t have any tax to pay. Here we explain why you might be owed a refund from HMRC and how to make sure you are repaid.

Paying the wrong amount of tax can take place because of system errors, user error, or if your circumstances change. Most commonly, you will get a tax refund after paying too much income tax. Some common reasons for overpaying tax include:

Stevie Heafford, at accountancy firm HW Fisher, said: “There are a number of ways tax overpayments can happen, from using the wrong tax code, changing jobs during the tax year, or making changes to your pension contributions.”

You may also have overpaid if you have received government allowances, such as Jobseeker’s Allowance or Employment and Support Allowance.

Equally, there are scenarios where you may have paid too much income tax if you are self- employed. Ms Heafford added: “It could be that these individuals have made their ‘ payments on account’ based on estimated income that ended up being higher than the amount they actually earned. Alternatively, they might have incurred business- related expenses that are tax deductible, but did not claim them when calculating their tax liability.”

If this is the case, you will have to wait until you next file a tax return to prove that your profits don’t match up to the tax you have already paid.

There are a host of other reasons you might receive a rebate.

Dawn Register, head of tax dispute resolution at accountancy firm BDO, said: “You might be due a tax refund if you have made charitable donations or if you have made certain tax- efficient investments (such as Enterprise Investment Scheme or Seed Enterprise Investment Scheme). Alternatively, you might have allowable expenses to claim against your employment income, you may not have worked for the whole of the tax year, or HMRC may have used an estimate in your tax code for the year which proved to be excessive.”

Refunds may also apply when people leave the UK or leave employment because of retirement or redundancy.

In most cases, HMRC will calculate that you have paid too much tax and it will send you a tax calculation letter, known as a P800 – or “Simple Assessment letter”. Only employed workers or those who receive pension payments will receive these.

The document should outline how much tax you are owed and how to claim a refund. Ms Register said: “These letters are usually issued by the end of November – so November 2023 for the 2022-23 tax year.”

The P800 should also detail your tax code and how HMRC has worked it out. If you see anything that doesn’t look right, contact HMRC to find out if any errors have been made.

Before you get too excited, be warned that a P800 might not always be good news, as if the letter states that you have underpaid your taxes, you will need to make an extra tax payment.

If you have not already received one, you can check your tax calculation yourself by logging on to your personal tax account.

If you think you have overpaid tax and have not received an automatic rebate or a P800 form, you can claim your tax refund using Gov. uk’s online tool: www.gov.uk/claim-tax-refund.

You will need to answer a few questions about why you think you have overpaid tax. You may need to log into your tax account, or you might also be able to claim via HMRC’s mobile app.

Ms Register added: “In some cases, you can claim the refund online – for example, claiming some allowable expenses against your employment income. In others, such as if you have received a redundancy payment, you will need to call HMRC to explain