What Are HMRC Tax Refunds?

There are many different tax allowances and refunds available to UK taxpayers depending on the personal circumstances and employment status of an individual. Although you might be getting an automatic tax rebate, you may also be eligible for some tax refunds that you might not know right now.

Here, we have a detailed article on HMRC Tax Refunds.

What is a tax refund? 

You can apply for a tax refund to get some money back if you are eligible for tax benefits or have to pay excess taxes on personal income.

Although the tax system works efficiently most of the time, on certain occasions when there is some error, a tax refund is important.

It is essential to stay updated with your finances and understand the tax situation, ensuring that you do not pay more than needed.

If you think you are paying excess taxes and do not receive an automatic rebate, then you can follow a process to claim your refund.

How is your tax obligation calculated? 

The main reason behind the tax rebate is you paid too much tax on your personal income.

If you earn over £12,570 personal tax-free allowance, you are liable for income tax. However, it’s not just salary that counts as personal income.

Everything you are earning, from pension payments to life annuities and interest on investments, counts as personal income.

So if you are not earning a huge basic salary, your income sources will make you eligible to pay higher tax rates. With so many various income sources, HMRC tax refunds rely on the employer to give you an accurate tax code and on you to fill out declaration forms to find out how much tax you need to pay.

Miscalculations are normal and can happen at any time, so keeping a close check on tax readings is essential.

What can you get a tax refund on?

You can apply for a tax refund on your personal income, including:

  • Salary from your previous or current job 
  • Income from a pension or life annuity 
  • Pension payments 
  • A Self-Assessment tax return 
  • Interest from PPI or savings
  • A redundancy payment 
  • Foreign Income 
  • Job expenses
  • UK income

Am I eligible for an HMRC tax rebate?  

If you have accidentally overpaid your taxes or still have to claim a tax refund like the uniform tax refund, then you are eligible.

In order to receive a tax refund, you will have to claim for up to four years or arrears and notify the HMRC about your allowance to update your tax code.

You are also eligible to receive certain tax refunds on the basis of your employment status; however, you will have to pursue these refunds.

From accommodation and travel costs to professional membership refunds, you are eligible if you bear these job-related expenses.


How to claim your tax rebate 

If you receive P800 to remind you of your tax refund due, you can easily claim your tax refund via the Government’s online portal. The portal will ask certain questions to check your eligibility for the application.

Thereon you can access your tax information and also track online refund process. In case you are self employed and completed annual self assessment then complete the tax refund before HMRC processes due rebate.

How much will I get back? 

There are several factors that influence that tax refund amount, such as income bracket,WFH, or whether you are incurring any expenses for equipment, services, or a vehicle for your employment.

Certain allowances like cleaning costs and clothing repair all depend on your income tax rate and your expenses.

For instance, if you spend £50 every year on cleaning the job uniform, you will get a 20% rebate on this amount.

When do you receive a tax refund?

You will receive a P800 at the end of every tax year to inform you about any eligible refunds. These will be automatically delivered within 5 working days; however, you might also receive a cheque within 14 days or longer.

In case you are expecting HMRC tax refund of more than one year then you will be receiving one cheque. The process however might take some time and the amount of time varies on the nature of enquiry or your circumstances. 

The tax system might be a little complicated; however, with appropriate knowledge, you can claim refunds of up to hundreds of pounds in some cases. It always helps to consult an accountant to check if you are eligible for a tax refund.

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