Do tax rebates happen automatically?

HMRC doesn’t always automatically refund overpayments of tax, so it’s worth checking your tax position regularly to see if you are owed a tax rebate.

While the tax office does issue automatic tax rebates in some circumstances, you often need to take action yourself to get your money back.

Figuring out if you’ve overpaid tax is the key first step to reclaiming your income tax. This helps you understand the right way to claim your tax rebate.

Tax rebates primarily arise from overpayments within the PAYE system, which automatically deducts tax from your wages or pension before you receive them.

Despite this system’s efficiency, circumstances sometimes lead to incorrect deductions which are usually repaid by HMRC automatically.

Other tax rebate types can’t be refunded unless you follow a particular HMRC process. This includes tax reliefs and tax allowances that require you to fill out a claim-specific form.

In this straightforward guide, we’ll cover when PAYE tax rebates are automatically paid, identifying if you’re eligible, understanding the different claim methods, to realistic timeframes for receiving your money.

When does HMRC issue automatic tax rebates?

There are a number of situations where HMRC will automatically refund your overpaid tax by issuing a tax rebate.

One of the main reasons that triggers a rebate is directly related to the impact your tax free personal allowance has on your tax code.

Some common situations where you might receive a tax rebate automatically include:

• You started a new job and were emergency taxed because your employer didn’t have your P45 and didn’t give you a starter checklist.
• You had more than one job simultaneously.
• You only worked for part of the tax year.
• You stopped working altogether.
• You had work expenses that are eligible for tax relief but haven’t claimed them.
• You received taxable benefits like jobseeker’s allowance and had tax deducted incorrectly.

When does HMRC issue a tax rebate automatically?

A tax rebate can be sent out without you needing to claim either during the tax year or after the current tax year ends on the 5 April.

Tax rebate during the current tax year:

If you are employed an in year tax rebate can be administered by your employer in the form of a refund or by reducing the amount of tax you pay in your next salary payment.

Or

If you stop employment during the current tax year HMRC may refund overpaid tax after they have received your final P45 information from your employer.

Tax rebate after the tax year ends:

HMRC’s computerised reconciliation process merges your earnings and tax details when the tax year concludes.

This assessment covers all PAYE income sources including the wages shown on your annual P60 or pension statement.

For previous tax years, HMRC either sends out a direct tax rebate (usually between June and November) or adjusts your current tax code.

Does HMRC tell me I am getting an automatic tax rebate?

If HMRC discovers you’ve overpaid tax, they’ll send you a P800 tax calculation letter. You should be able to see the same P800 details in your personal tax account online.

When you receive a P800, check it’s wording carefully to understand how you can receive your refund by one of three ways:

• Online – If you can get your refund online, you’ll see steps on how to claim it. You can ask for your tax back to go straight into your personal bank account.

For P800 refunds claimed via the online bank transfer service, payments usually arrive within five working days.

• By Post – When your P800 shows that HMRC plans to send a cheque, you don’t need to do anything.

Cheque refunds following a P800 calculation typically arrive within 14 days of the letter’s date.

If you request a cheque through HMRC’s online service, expect to wait up to six weeks.

• By Phone – If you can’t claim online or run into problems, call HMRC’s income tax helpline to ask for your refund.

What to do if you believe you’re owed but haven’t received anything

If you think you’ve paid too much tax but haven’t received a P800, you’ll need to file a tax rebate claim on your own.

But before you do anything, take a look at your personal tax account. You might not have seen a message from HMRC or received a P800 or cheque through the post.

Your personal tax account will show any refunds of tax that have been automatically credited to your account and let’s you know how to request them.

Prior to initiating a claim or getting in touch with HMRC, you can use the HMRC tax checker tool to confirm your current personal allowance and tax code.

HMRC offers several online services to verify your tax position:

• Access this through your personal tax account on the HMRC website or the HMRC app offers similar functionality.
• The tax code checking service helps you understand if your current tax code is correct. Simply enter your tax code and income details.

To access these tools:

• Sign in to your HMRC online account (or create one if you don’t have it).
• Navigate to the “Check your Income Tax” section.
• Follow the prompts to enter your details.

Our free tax code checker enables you review your present and past tax codes from the last four financial years.

Tax rebates that are not automatically repaid

To claim tax relief and allowances, you need to follow a set process that may vary depending on the type of claim.

As an example for those who stop working during the tax year without plans to return within four weeks or claim benefits, you can request an in-year tax repayment using form P50.

Understanding which tax allowances and reliefs you qualify for and how to use them can help you substantially reduce your tax obligations across multiple years.

Remember that you generally have four years to claim overpaid tax so if you’ve missed claiming in previous years, you might be eligible to claim for more than one at the same time.

HMRC needs you to claim back tax relief for a number of reasons including:

• Work expenses like business mileage and working from home.
• Tax code allowances for tools and uniform maintenance.
• Subscriptions for some professional bodies and unions.
• Higher rate tax relief on pension contributions.
• Marriage tax allowance.

Our guide to claiming an HMRC tax refund covers the usual tax rebate types available PAYE taxpayers and the steps you need to take to get your money back.