Can I claim an income tax rebate?

Paying bills is just a part of life. However what you may not realise is that sometimes people overpay their income tax, resulting in millions of people paying more in tax than they should.

If you suspect, or know, you have overpaid it is possible to claim a rebate and get your money back for the last four tax years. In a lot of cases it’s down to you to reclaim income tax, meaning you won’t get a rebate automatically on the tax you shouldn’t have paid in the first place.

What is income tax?

As the name suggests Income Tax is a payment that is subtracted from the money you earn over the course of a year. However a certain amount of your income is protected and not taxable (this is what is known as your personal allowance).

Most employed people automatically pay out Income Tax via the PAYE (This is short for Pay as you earn) system with the payment taken out before you receive your pay.

The PAYE system is based on tax codes. People on fixed incomes can generally get an accurate gauge of how much tax they have to pay. However, if your pay is not fixed (such as, if you do seasonal work such as a summer job, or have a zero hours contract) it can be harder to work out how much income tax needs to be paid on those earnings.

This PAYE system is not perfect and the more complicated your tax affairs are the higher the chance you will not pay the right amount of tax.

There is one standard Personal Allowance rate for everyone. You find the most up to date tax free personal allowances here.

Reasons for being eligible to claim an income tax rebate

There are numerous reasons for overpaying income tax. Tax payers who are employed often pay too much tax because they don’t reclaim the tax relief they are owed on the cost of expenses incurred at work.

There are a number of allowable expenses ranging from washing your own uniform, using your own car to travel to temporary workplaces and buying tools and equipment.

Having an incorrect tax code

It is the responsibility of your employer/pension provider to use the HMRC tax code you have been given. An incorrect tax code can result in people either paying more or less tax than they should do. Therefore it is important to check they have the correct details and that their information is fully up to date.

Overpaying tax on your pension

Overpaying tax on your pension can happen because:

  • You are a higher rate tax payer and you aren’t claiming back the additional tax relief that’s available. The additional tax relief is only allowable on private pension contributions.
  • You have been given an incorrect tax code.
  • You have had changes in benefit entitlements.
  • You have started self employment.
  • You are a UK non resident.

Overpaid tax on savings

Savings accounts will often deduct tax from your interest before any money is put into your account (the exception is if you have invested in an ISA or if you have an R85 form to prove that you are exempt from paying tax on the interest in your account).

For people who do not pay tax on savings (such as people who earn below their Personal Allowance) then it is possible to get a refund on any tax that was paid on the interest.

There is a four year limit on reclaiming tax paid through the interest on your savings.

How do I reclaim income tax?

So you think you could be due an income tax rebate? The next question is how do I reclaim it?

The best way to claim your income tax back is dependent on the type of income tax rebate you are entitled to.

A P87 form is normally used to claim back expenses due to your job and this can be submitted to HMRC online or through the post.

If you are due an income tax rebate automatically you can claim it back through the HMRC app or your online personal tax account.

Reclaiming income tax through Self Assessment

If you have missed out on claiming an income tax rebate, for whatever reason, you can still reclaim any income tax overpaid (just like a PAYE claim). In theory, the Self Assessment system should mean a more accurate claim.

However mistakes can happen and overpayments can still occur. You have four years to submit a claim for a Self Assessment refund and cannot claim for overpayments beyond this date.

In order to make a claim you can amend the most recent tax year’s return online up to the 31st January. For any year before that a claim will need to be made in writing.

Start your income tax rebate claim today

Use our Tax Rebate calculator below to get an estimate of what you could be owed and you can find more about income tax and tax rebates in our free guides.

Income Tax Calculator

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Tax Rebate Calculator

Tax free personal allowances

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