What to do if you think you’ve paid too much tax

For most of us, paying tax is just a fact of life – whether you’re an employee or you run your own business. But surprisingly, it’s very easy to pay more tax than you need do. In fact, every year thousands of people in the UK pay more tax than they actually owe.

If you’re currently in this situation, or think you might be, you’ll need to get in touch with Her Majesty’s Revenue & Customs (or HMRC as they’re more commonly known).

Have I paid too much tax?

If you’re employed, your employer will use the tax code allocated to you by HMRC in order to establish how much tax you should be paying. If this applies to you, you should check your tax code to see whether you’re on the right one. You can find it on your wage slip or P60. Having an incorrect tax code means you could be paying too much (or even too little) tax – and you’ll need to give HMRC a call as soon as possible.

If you’re self-employed, the amount of tax you pay is based on your annual self-assessment tax return. Still, it’s possible that you could be paying too much tax if you have supplied any incorrect information or an incorrect calculation has been made.

How do you get your tax back?

First of all, HMRC will carry out a tax assessment to confirm whether or not you’ve paid the correct amount of tax. When you speak to an adviser, they’ll tell you exactly which documents they need in order to this (they’ll usually need your P60 as a starting point).

Bear in mind that HMRC can also check your previous year’s contributions during your assessment. And if you believe you’ve been overpaying, you can claim up to six years of overpayments.

If they find that you’ve paid too much tax following your assessment, you’ll be able to claim a rebate in order to get your money back. There’s no charge to claim tax back, it’s free of charge.

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PAYE

Most employees pay their income tax through the PAYE (or pay-as-you-earn) system, which simply deducts tax from your salary before you receive it. The amount you pay is based on your tax code – and this makes things nice and straightforward if you earn that same amount of money each month.

But if your pay changes from month to month, you could pay more tax than you actually need to. The same goes if you’re not employed for every month of the year – for example, if you have a seasonal job or you study part-time.

Remember: When you get in touch with HMRC to ask about your rebate, you’ll need to have your tax reference and National Insurance number with you (both of these are listed on your payslip).

Self-assessment

If you’re self-employed and think you’ve paid too much tax through your self-assessment tax return, you’ll go through the same process in order to claim your refund. Give HMRC a call and they will talk you through the process and let them know what you need.

Just bear in mind that you have up to four years to submit a claim for a self-assessment refund. You will be unable to claim for overpayments after this time.

Remember: If you’d like to correct an error on your tax return, you must do so within 12 months of submitting your self-assessment. You’ll need to write to HMRC with details of the required changes you, or you could complete an amendment on the HMRC website. Make sure you supply the following details in order to be considered:

  • Tax year of your overpayment
  • Reasons why you’ve paid too much tax
  • Evidence of the tax that has already been paid (such as a copy of your tax return)
  • Copy of your signature
  • How you’d like to receive your payment (if due)