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Wednesday, 3 October 2023

Understanding your tax refund

If you've received an Income Tax 'repayment' it will either be following a claim you've made or because HM Revenue & Customs (HMRC) has received new information about your taxable income or entitlement to allowances. The refund may come through your tax code or as a payment and could relate to the current tax year or earlier years.

Why you've received an Income Tax repayment

An Income Tax repayment is a refund of tax that you've overpaid. So, if you've paid too much tax for example through your job or pension this year or in previous years HMRC will send you a repayment.

You'll get the repayment either by cheque in the post, by bank transfer or through your wages.

At the moment HMRC can refund you overpaid tax going back up to four years.

When might you have overpaid tax?

You might have overpaid tax if:

  • your employer used the wrong tax code
  • you started a new job and had an emergency tax code for a while
  • you only worked for part of the year
  • you had more than one job at the same time
  • you didn't tell HMRC right away about changes to benefits you got through your work
  • your circumstances changed - perhaps you were made redundant or became self employed and therefore your income reduced
  • other income like investments or rental income reduced but you didn't tell HMRC
  • you made a mistake on your tax return
  • HMRC made a mistake with your tax

All of these things and more can mean you paid too much tax.

If you've paid too much tax through your employment or company pension

HMRC gives you a tax code that tells your employer or pension provider how much tax to take off your wages or pension before you get paid. If you've paid too much tax this year HMRC may send you a new tax code and your employer or pension provider will pay you your refund with your wages or pension.

If you've paid too much tax in earlier years HMRC works out how much they owe you and sends you a refund in the post or by bank transfer.

If you've become unemployed, stopped work to return to studying or retired you may also receive a tax refund from HMRC.

If you've overpaid tax through Self Assessment

If you've overpaid tax though Self Assessment you can ask for a refund or leave the overpayment in your Self Assessment account to set against future tax bills. You can ask HMRC to pay your refund to you, your agent or nominee or a nominated charity. From 6 April 2023 you will no longer be able to make repayments to charity for any year. After this date any repayment requested to go to charity will be sent to you.

You can check the amount of the overpayment in your Self Assessment tax calculation, Statement of Account, or online Self Assessment Account.

Your refund will include any interest due on the amount overpaid.

What to do if you think your refund is wrong

If you think your refund is wrong it's important to get in touch with HMRC quickly so that they can put things right.

Provided by HM Revenue and Customs

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