If you are employed by a company, then your taxes and national insurance contributions should be automatically taken from your wages. Unfortunately, things don’t always go to plan and on occasion, you might end up paying more tax than you owe. This can happen for a number of reasons, but your main priority will naturally be to claim the money back as soon as possible. If you think you may have paid too much tax, follow this simple guide to claim your rebate.
Reasons You May Overpay
One of the most common reasons that individuals overpay tax is when their employer uses the wrong tax code. It’s frustrating, but you need to make sure you check you have the correct tax code every month. If the amount you get paid looks a little lower than you were expecting, there might be an issue with your tax code. If you change your normal working hours throughout the year, switching from full-time to part-time for example, then you may overpay tax. This is because your tax code is calculated on the full-time salary and might not be changed when you change your hours.
Other common reasons you might pay too much tax are when you change jobs. If your new employer doesn’t have access to your P45 then they may place you on something known as an emergency tax code. This is particularly common for students who only work during the holidays and it can mean they end up paying a lot more tax than they need. If you are unsure if you’re on the right tax code, the best thing to do is give HMRC a call.
How Do I Know If I’ve Paid Too Much Tax?
The first step to finding out if you’ve paid too much tax is to check your payslips. At the end of the year, you should receive a P60 tax form which offers a summary of your earnings for the year. It’s important that you check the information is correct as you are the one responsible for ensuring you pay the correct tax. If something is incorrect, you should inform HMRC immediately.
Another way you can find out if you’ve paid too much tax is with the P800 form. This is a letter provided by HMRC which shows what they think you should have paid versus what you actually paid. It should include all of your income sources, so it’s important that you check it carefully as any mistakes that lead to underpaying can lead to an investigation.
How Do I Get A Tax Rebate?
The tax year runs from the 6th April to the 5th April, so you will have to wait until the end of the tax year to claim your rebate. This is because your circumstances might change throughout the year which results in your underpaying tax, so HMRC only processes tax returns at the end of the tax year. While this may be inconvenient for anyone who has overpaid tax, it’s better than owing more tax at the end of the year.
Any overpaid tax can be returned to you in a number of different ways. If you are in employment, then your overpaid tax may be returned to you in your wages. Alternatively, you may be able to log in to the Government Gateway account to arrange a bank transfer to a UK bank account. If you do not claim your tax rebate within 45 days, a cheque will be sent to your home address and it will be your responsibility to put the money in your bank account.