What is PAYE?
PAYE stands for Pay As You Earn and is the system used by the tax office (HMRC) to tax people who are employed, or receiving other income such as a pension.
PAYE tax is collected by your employer and sent to the tax office every week or month. The amount of PAYE tax you pay is worked out by the tax code you are given.
Paying tax through Pay as you Earn means any income tax is deducted straight from your wages or other income before you are paid.
PAYE and your tax code
Your PAYE tax code is really important and lets your source of income know how much tax to deduct from your earnings. The tax office will tell your employer what your tax code is each tax year or when you have a change in circumstances. You can learn more about PAYE tax codes in our PAYE tax code guide.
Are you due a PAYE tax rebate?
Paying tax by way of PAYE does not mean you can’t pay too much tax, so don’t assume everything is right or it could cost you. Every year hundreds of thousands of UK tax payers overpay income tax under PAYE. There are many reasons why you could have overpaid tax and be due a PAYE tax refund.
Some of the main causes of paying too much PAYE tax include:
- Not claiming back tax relief on expenses you have because of your job.
- Having an incorrect tax code.
- You are a UK non resident for tax purposes.
It is your responsibility to ensure that you have not paid too much tax and in most cases you will need to reclaim any overpaid tax directly from the tax office if you don’t you won’t get it back.
The PAYE tax year
The PAYE tax year runs from the 6th April to the 5th April the following year. There is a time limit of four tax years for you to reclaim any over payment of income tax so it’s good to know when the tax year starts and stops so you don’t miss the deadline.
If you are employed the most common forms you are given are:
- P60 – at the end of each tax year showing your total earnings and tax paid
- P45 – if you leave your job
- P11d – for people who have a company benefit like a health scheme
Nearly all forms under PAYE are given to you by your employer.
HMRC debts and PAYE
If you owe tax HMRC can take money out of your pay to collect the money you owe them. They can do this by changing your tax code so that you pay more tax each month. There is a limit as to how much can be claimed.
Earning less than £30,000
The maximum HMRC can collect is £3000 per tax year
Earning over £30,000
The maximum that can be claimed if you earn over £30,000 goes up depending on how much you earn.
The most HMRC can take in any one year £17,000 but only if you earn £90,000 or over.
Ways to claim your PAYE tax rebate
Tax Rebate Services
We offer a great value PAYE tax rebate service which will give you professional support and guarantees you receive all of the income tax back you are eligible for. Tax Rebate Services makes claiming straight forward and removes all the hassle. In addition, our No Rebate, No Fee policy means there is no risk to you.
Do it yourself
By contacting the tax office yourself you won’t be charged but will need to know what you are trying to claim for, and be able to check that you are rewarded all of the PAYE tax back you are entitled to. Making a PAYE tax refund claim can be difficult and time consuming.
Use our Tax Rebate calculator below to get a personalised estimate of how much tax relief you could be owed for PAYE overpayment and work expenses.
PAYE Tax Rebate Calculator
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- Am I due a tax rebate?
- Are tax rebates automatic?
- Can I make a tax claim?
- How do I reclaim tax?
- How far back can I claim a tax rebate?
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- What is the UK tax year?
- Can I claim an income tax rebate?
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- What is HMRC?
- Have I underpaid tax?