Over 3 million to start receiving tax refund payouts this weekHMRC starts paying tax refunds two months early

14 May 2012

Tax through a magnifying glass

Tax repayments from HMRC for up to 3.5m taxpayers start this week

Over three million taxpayers will start to receive tax refunds from HMRC this week, two months earlier than last year.

As many as 3.5 million people who have overpaid tax in 2011/12 will receive an average repayment of £379. A further 1.6 million people who have underpaid tax during the year will have to make up an average £537 shortfall.

Do I have to claim a tax refund?

If you've paid too much or too little tax, HMRC will send you a form P800. If you've paid too much tax, an automatic repayment is made without you having to make a claim, so there is usually no need to contact HMRC. Payments will start to be made this week, although the process is likely to continue until October.

If you've paid too little tax, the underpayment is usually recovered automatically in instalments over the following tax year through the pay as you earn (PAYE) system. The recovery of tax underpaid can be spread over a longer period where this causes hardship.

Why have I overpaid tax?

Under PAYE, a tax code is allocated to every individual to reflect their personal circumstances. This is designed to ensure the right amount of tax is deducted at source. Where an individual's circumstances change and these changes are not notified to HMRC, individuals could end up paying too little or too much tax during the year. The annual reconciliation process checks whether the right amount of tax has been paid once all the information is provided to HMRC at the end of the tax year.

Around 85% of taxpayers pay the correct amount of tax during the year, but end-of-year adjustments are needed for the other 15%. Reasons for changes include:

  • Benefits in kind provided by the employer have changed during the year.
  • Where you have more than one job or pension and the tax free allowances are spread between them.
  • If the customer you moved jobs and have had gaps between periods of work.

How much tax do I have to pay for 2011/12?

To help you check your likely tax bill for the 2011/12 tax year, we've created a free tax calculator. Use this tax tool to work out if you're likely to receive a tax rebate, or to calculate your tax bill if you pay by self assessment.

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