Stamped Duty Rebate

HMRC owes tax rebates to millions – here’s how to get yours

None of us wants to give more money to the taxman than we absolutely have to – yet it’s estimated that millions of people are paying too much tax every year, due to things like having the wrong Pay As You Earn tax code, or being eligible to claim certain tax breaks or benefits.

If you have overpaid for some reason, you’ll want to get back what you’re owed.

In certain circumstances, HM Revenue & Customs will issue you a rebate, without you having to do anything. But in others, you will need to check and apply for a refund yourself.

In some cases, completing a self-assessment tax return will trigger the tax refund – even if you don’t have any tax to pay.

Here, Telegraph Money explains why you might be owed a refund from HMRC, and how to make sure you’re repaid it.

What is a tax rebate?

A tax rebate details the amount of money you’re owed back from HMRC, after paying more tax than you need to. You might be owed a rebate for several reasons, such as an error, the fact that you didn’t earn as much as HMRC thought you would, or being eligible for certain tax breaks that mean you can be refunded for tax you’ve overpaid.

You might be paid a tax rebate automatically, or you might need to apply for a refund.

Why might you be owed a tax refund?

Paying the wrong amount of tax can take place because of system errors, user error, or if your circumstances change. Most commonly, you’ll get a tax refund after paying too much income tax.

  • Some common reasons for overpaying tax include:

  • Being placed on an emergency tax code after starting a new job

  • Being placed on the incorrect tax code

  • Having more than one job

  • Making payments on account that outweigh your profits.

Stevie Heafford, tax partner at accountancy firm, HW Fisher, said: “There are a number of ways [tax overpayments] can happen, from using the wrong tax code, changing jobs during the tax year, or making changes to your pension contributions.”

You may also have overpaid if you have received government allowances, such as Jobseeker’s Allowance or Employment and Support Allowance.

Equally, there are scenarios where you may have paid too much income tax if you’re self-employed.

Ms Heafford added: “It could be that these individuals have made their ‘payments on account’ based on estimated income that ended up being higher than the amount they actually earned. Alternatively, they might have incurred business-related expenses that are tax deductible, but did not claim them when calculating their tax liability.”

If this is the case, you’ll have to wait until you next file a tax return to prove that your profits don’t match up to the tax you’ve already paid.

There are a host of other reasons you might get a rebate.

Dawn Register, head of tax dispute resolution at accountancy firm, BDO, said: “You might be due a tax refund if you have made charitable donations or if you have made certain tax-efficient investments (like Enterprise Investment Scheme, EIS, or Seed Enterprise Investment Scheme, SEIS). Alternatively, you might have allowable expenses to claim against your employment income, you may not have worked for the whole of the tax year, or HMRC may have used an estimate in your tax code for the year which proved to be excessive.”

Refunds may also apply when people leave the UK or leave employment – for example, because of retirement or redundancy.

If HMRC knows you are owed a tax rebate

In most cases, HMRC will calculate that you have paid too much tax, and it will send you a tax calculation letter, known as a P800 – or “Simple Assessment letter”. Only employed workers or those who receive pension payments will receive these.

The document should outline how much tax you are owed, and how to claim a refund.

Ms Register said: “These letters are usually issued by the end of November – so November 2023 for the 2022-23 tax year.”

The P800 should also detail your tax code, and how HMRC has worked it out. If you see anything that doesn’t look right, contact HMRC to find out if any errors have been made.

Before you get too excited, be warned that a P800 might not always be good news, as if the letter states that you have underpaid your taxes, you will need to make an extra tax payment.

If you have not already received one, you can check your tax calculation yourself by logging on to your personal tax account.

How to apply for a tax refund

If you think you’ve overpaid tax and haven’t received an automatic rebate or a P800 form, you can claim your tax refund using Gov.uk’s online tool.

You’ll need to answer a few questions about why you think you’ve overpaid tax, and each instance has details on your likelihood of being owed a refund (for instance, if you haven’t received a P800 then you’re told “you’ve probably paid the right amount of tax”), and how to claim one.

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You may need to log in to your personal tax account, or you might also be able to claim via HMRC’s mobile app.

Ms Register added: “In some cases, you can claim the refund online – for example, claiming some allowable expenses against your employment income. In others, such as if you have received a redundancy payment, you’ll need to call HMRC to explain why you think you are due a refund.”

Where you want to claim relief for pension contributions, charitable donations, or on tax-efficient investments for 2022-23, you will need to write to HMRC or complete a self-assessment tax return. If you are self-employed, you can claim a tax refund from HMRC through your self-assessment tax return, and even detail which account you want your refund to be credited to.

The next self-assessment deadline is January 31, 2024.

How long does an HMRC refund take?

While refunds can be issued in as little as five working days, in some cases you’ll need to wait up to eight weeks.

Ms Register said: “For example, if you applied on paper – or if any security checks need to be made by HMRC – the timing will depend on HMRC’s workload.”

Also note that if HMRC ends up posting you a cheque for the amount you have overpaid, this could take two weeks to arrive, and maybe more.

If you’ve already made a refund request, you can use this tool to see when you might expect a reply.

Can I backdate tax refund claims?

Note that tax refund claims can be made in arrears of up to four years. This means you could potentially claim a big tax rebate on areas you’ve missed.

Equally, if a claim is not made within the time limit, you will lose out on any refund that may be due, and the tax year will become “closed” to claims.

How much might you get?

The size of your tax rebate will depend on factors such as why and how you’ve overpaid tax, and your income bracket.

For example, if you’re claiming a uniform rebate, which covers outgoings for maintaining a work uniform, there is a flat-price £60 allowance you might be eligible for.

According to MoneySavingExpert.com, if you claim a uniform tax refund, you’ll get back the amount of tax you would have paid on this amount. This amounts to £12 as a basic-rate taxpayer (20pc of £60), and £24 as a higher-rate taxpayer.

What about the council tax rebate?

This works a little differently to “normal” tax rebates, as it is a cost of living payment issued by the Government to help households cope with rising prices.

It is a £150 payment given to those who live in homes between bands A and D.

Councils started handing out the money in April 2022, but some households have yet to claim.

In most cases, the money was paid directly into the bank accounts of council tax bill payers.

To find out more, contact your local council.

Marriage allowance rebates

If you’re married or in a civil partnership, you may be eligible to claim marriage allowance. This is a tax break for couples where one earns less than the personal allowance (£12,570), and one pays basic-rate tax (with earnings up to £50,270). The lower-earning spouse can transfer 10pc of their personal allowance to the higher-earning spouse, essentially increasing the annual take-home pay of the household by up to £250.

Couples can apply for this online, and the good news is that payments can be backdated for up to four years, resulting in a potential tax rebate of up to £1,256.

You can apply online for free, directly from HMRC.

Stamp duty rebates

In some cases, homeowners may pay too much stamp duty on their property, and will be eligible for a refund. Most commonly, this happens when someone buys a new home shortly before their existing property has been sold.

This means the transaction goes through as a second home, incurring an extra 3pc stamp duty surcharge, when in fact, it is the buyer’s only property.

For this refund, you’ll need to fill out HMRC’s application form either within 12 months from the date you sold your old home, or within a year of the new property’s stamp duty filing date, whichever comes later.

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Watch out for tax rebate scams

While HMRC has taken steps to crack down on tax refund scams, you still need to be vigilant.

Fraudsters impersonating HMRC have been known to send fake emails informing people they are owed money.

They will then invite individuals to share their payment details so they can receive their “refund”.

But if you click on the link in order to get the rebate, you are putting yourself at risk of being phished by scammers, and having your personal details – and your money – stolen.

Never engage with an email of this nature. If you are unsure whether or not any message you have received is genuine, contact HMRC via the official channels before taking any action.

Ms Heafford said: “Sadly HMRC-related scams are becoming increasingly common. But HMRC will never contact you about a tax rebate via text or message or email. Remain on your guard at all times.”

To help HMRC crack down on these scams, forward any suspicious emails to phishing@hmrc.gov.uk.

Tips to stop you overpaying tax

One of the key ways to help you avoid paying more tax than you should is to make sure you fully understand your tax situation. As a first step, log on to your personal tax account on the HMRC website and check your tax records.

You can also use your online tax account to tell HMRC about pension contributions, charitable donations, expenses, work benefits (such as private healthcare or a company car) and details of your non-earned income.
The more HMRC knows about your income and the reliefs you are entitled to during the tax year, the more likely it is it will get your tax code correct. This can help you avoid an overpayment – or underpayment.

Ms Register said: “For example, if you get a new benefit-in-kind from your employer, telling HMRC about it during the year will avoid building up a tax bill that they have to collect the following year.”

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