Have you ever sat there with someone who has received a cheque from HMRC because they have paid too much tax? I bet you sit there thinking; ‘Have I overpaid in tax?’, ‘Will I receive a tax refund automatically?’ or even ‘How do you get a tax rebate?’
Well funnily enough, you might have overpaid without even realising.
TAX CODE
First of all, do you even know what your tax code should be? Millions of people receive their tax code notice in January or February each year and don’t even look at it.
Did you know… it is your responsibility to check your tax code!
If it is wrong, you could be overpaying or underpaying tax throughout a tax year. Sure, if you’re overpaying you are greeted with a surprising refund BUT if you are underpaying you could be faced with a unfriendly tax bill.
For 2021/22, the current tax year, the personal allowance is £12,570, this would mean your tax code should be 1257L. This is the standard personal allowance for someone with one employment income of less than £100,000 and nothing else. However, tax codes can get so much more complex.
Common tax codes and their meanings:
| Tax code | Meaning |
| 0T | Zero allowances and HMRC to check at year end |
| BR | All income taxed at basic rate |
| D0 | All income taxed at higher rate |
| D1 | All income taxed at additional rate |
| NT | No tax due |
Alongside these common tax codes, you could also have benefits in kind which may push your allowances into a negative figure. This is where a K code would occur. K codes are given to individuals that have more items that reduce the allowances than increase them, the amount of the K code would actually be taxed as extra income.
However, on the other side of things, you may also be entitled to extra allowances.
UNIFORM MAINTENANCE
Branded clothing relating to your business does need cleaning, right? Who pays for that? Well, HMRC have come up with a flat-rate allowance depending on your profession. This can be worthwhile, especially if you are a pilot, cabin crew or nurse. The full list can be found here. Take a quick look as it could be worthwhile if you have been working in your job for four years. You could make an overpayment claim for the last four years and get a tax refund for the amounts you have overpaid.
We have managed to get some air stewardesses over £400 back from these claims in the past. Don’t hesitate to get in touch if you would like us to have a look at this claim for you.
BUSINESS MILEAGE
If you use your own car for work travel, not including commuting, then your employer can reimburse you. HMRC have approved rates of 45p per mile for the first 10,000 business miles and 25p per mile thereafter tax-free.
Does your Employer pay you less than the 45p per mile we have mentioned above? Well, you can claim the tax relief on the difference.
TOOLS AND EQUIPMENT
Claiming a tax rebate for your tools and equipment may also be on the cards– as long as these tools are necessary for your work.
Similar to the cleaning of branded workwear, HMRC understands that some employers require their employees to provide small tools. Again, HMRC allows a fixed-rate deduction depending upon your job.
PROFESSIONAL SUBSCRIPTIONS
It may be that you pay subscriptions to a professional body. This could be because you require qualification for your work, or they provide help in another way. Subscription to approved professional organisations and learned societies if the organisation is on the approved list then you can claim the subscription costs.
MARRIAGE ALLOWANCE
The Marriage Allowance allows a couple that is married or in a civil partnership to transfer some of their Personal Allowance to their spouse or partner. For example, if one person has used all of their Personal Allowance, but the other earns below the Personal Allowance (£12,570 for 2021/22), then they may be able to transfer up to £1,260. There are specific rules around this to be aware of.
GIFT AID
Giving to charity through Gift Aid may lead to you getting a tax rebate from HMRC. If you pay tax at the higher rate of 40% and over (£50,270+ in 2021/22) then you can add tax relief.
As a taxpayer, when you make a payment under Gift Aid, the registered charity can claim tax relief on the donations at the basic rate of tax. As a higher-rate taxpayer, you can claim the difference between your highest tax rate – say, 40% and the amount reclaimed by the charity.
PENSION CONTRIBUTIONS
If you make pension contributions from your net salary and pay tax at the higher rate of 40% then you may be able to claim additional tax relief.
The pension company will automatically claim the basic rate (20%) tax relief on your behalf and put this in your pension. However, if you do pay tax at 40% then you claim an additional 20% tax relief, subject to certain conditions.
MULTIPLE TYPES OF INCOME
It’s common for those who earn via the PAYE system in multiple jobs, or who have numerous income sources (such as pension income), to overpay on their tax. If the HMRC systems all work as they should then each employer should deduct the correct amount of tax. However, if you have several jobs at the same time, as say an agency worker, then this becomes problematic. Quite often the wrong amount of tax is collected from each employee and, in some cases, this leads to too much or too little tax being paid.
INACCURACIES AND ERRORS
Mistakes can be made in a variety of different ways. Perhaps an employer has made an error when working out the tax owed or, if you’re self-employed, you could have calculated it incorrectly.
The inaccuracy could be down to HMRC too. They may have provided you with the wrong tax code or made an error in another respect.
A tax refund may be on the cards if any of the situations on this list have happened. Wondering how exactly to find out if you’re entitled to a tax rebate? Get in touch today for your no obligation quote.
If you want to avoid the chances of overpaying tax in the future due to errors and ensure you’re claiming on expenses, then it’s a good idea to contact us sooner rather than later.
Information accurate at time of writing