More than 730,000 tax refunds were left unclaimed last year, with the average repayment worth £855, according to official government data. HMRC has now confirmed the reasons why you may be owed money after it was revealed that hundreds of thousands of people have paid too much tax.
What is a tax rebate?
Tax rebates, also called tax refunds, are paid out by the Government to people who pay too much tax in a financial year, which runs from April 6 to April 5. This could be the case, for example, if you started a new job, left a job, had more than one employer at the same time or were made redundant partway through the tax year. Your employer or HMRC could have also used an incorrect tax code.
Changes to how repayments are made
It comes after HMRC confirmed in August that, after certain multi-year P800 tax calculations have been completed, most taxpayers will no longer automatically receive their repayment by cheque. Instead, they will be required to request the money themselves.
Traditionally, HMRC would get in touch with anyone they owed tax to at the end of the financial year by sending them a letter detailing how much they were due to get paid. Now, thousands of taxpayers have to take action before receiving money they are owed.
HMRC data shows that more than 730,000 tax refunds were left unclaimed last year, with the average repayment worth £855. At the same time, around 45 million PAYE records are being checked this year.
How to claim your repayment
However, the new system will not apply in exactly the same way to every P800 recipient. Some calculations will still state that HMRC intends to issue a cheque automatically. Taxpayers should therefore check the wording of their P800 carefully to see whether they have been told to make a claim.
Anyone who is instructed to request their repayment can do so through HMRC's online tax overpayments service. They will need the unique reference number shown on their P800 along with their National Insurance number.
For those who claim online, HMRC says the repayment should usually arrive within five working days. Choosing to receive the money by cheque can take considerably longer, with payments potentially taking up to six weeks.
Reasons you could be eligible for a rebate
On the Gov.uk website, HMRC lists all the different things that you could have paid too much tax on and could make you eligible for a tax rebate. The 10 things that could make you eligible for a tax rebate are:
- pay from a job
- job expenses such as working from home, fuel, work clothing or tools
- a Self Assessment tax return
- a redundancy payment
- UK income if you live abroad
- interest from savings or payment protection insurance (PPI)
- income from a life annuity
- foreign income
- UK income earned before leaving the UK
- Pensions
You may also be able to claim a tax rebate on a pension, if you've stopped working and taken all your pension, taken a small pension lump sum, flexibly accessed all or some of your pension, or had income from a pension annuity.
HMRC explains: "You may be able to get a tax refund (also known as a ‘repayment’ or ‘rebate’) if you’ve paid too much tax. You can check how to claim a tax refund.
"You may not get a refund if you have tax due in the next 45 days (for example for a payment on account). Instead, the money will be deducted from the tax you owe.
"If you’ve already claimed a tax refund, you can check when you can expect a reply from HMRC about your claim.
"The status of your refund may show as ‘pending’ in your online tax account. This means that the refund has been created but still needs to be approved and paid."
You can use the tool on the Gov.uk website to see if you've paid too much tax and are owed a tax rebate.
