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Think you're owed a tax refund? Here's how to get 100% of your rebate

Claiming back overpaid tax should be easy enough to do yourself directly through HMRC
A payslip

If you think you’ve paid too much tax over the course of a financial year, then you may be eligible for a rebate. 

It's free to claim directly from HMRC. While some people might prefer to opt for someone to make a claim on their behalf, using a repayment agent to make a claim is unnecessary and can be costly. 

A Which? Money investigation in January 2022 found the fees charged by some third-party companies are as much as half of the tax refund received. In some cases, you'll pay even more, due to admin fees, VAT and tricky terms which can mean more charges in the future.

At the end of June, HMRC launched a 12-week consultation to find ways to better protect taxpayers from repayment agents. It will run until 14 September.

Here, Which? explains the kinds of tax can you get a refund on, and how you can make a claim.

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Why might you be owed a tax refund?

You'll be owed a tax refund if you've paid too much tax. There are a few common instances where this might happen, including:

  • starting a new job and being on an incorrect tax code
  • receiving foreign income
  • receiving interest from a PPI refund
  • receiving a redundancy payment
  • paying VAT for fuel or work clothing for your job
  • having more than one job
  • only working for part of the tax year.

In many instances, HMRC calculates overpaid tax automatically and sends a P800 form to explain how to claim that money back.

If this hasn't happened and you think you're owed a refund, you can go through HMRC's step-by-step online process. You'll be asked what you paid too much tax on, before being taken through a series of questions to find out a bit more about your circumstances.

Self-employed workers who pay tax by payments on account will be due tax refunds if profits have reduced since the previous tax year. 

However, the refund won't be processed until HMRC receives the tax return; you might receive your rebate quicker if you file well ahead of the January deadline, as the tax office is likely to be quieter.

How to claim marriage allowance

Another common reason HMRC will give out tax refunds is for couples making marriage allowance claims. 

This is a tax perk for couples that are married or in a civil partnership, and allows a person to transfer £1,260 of their personal allowance to their partner who earns more than them. That amount is then effectively added to the higher earner's personal allowance. 

To be eligible, one partner must be a non-taxpayer - in other words, earning less than the personal allowance (£12,570) - and their spouse must be paying the basic 20% rate of tax. This means they earn less than £50,270. Income tax rates and bands are different in Scotland, so the higher-earning partner must earn less than £43,662.

You'll save up to £252 in tax in 2022-23 - but it's also possible to backdate your claim for up to four tax years, meaning a rebate of up to £1,242, providing you were eligible during those periods

It’s easy and free to apply through HMRC's website - and you'll receive 100% of the rebate. 

You’ll need to have things like both of your National Insurance numbers handy, as well as two proofs of identity such as P60, recent payslips or passport details.

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Other ways to get tax back

Work expenses

If you are self-employed, you can deduct the cost of purchases that were for work/business purposes from your profits, which then reduces the amount of tax you'll pay. 

Expenses can include things like professional equipment, business travel costs and certain types of professional subscriptions. HMRC has a full list of allowable expenses on its website.

If you’re registered for VAT, you can also claim the 20% sales tax you pay on certain items from HMRC through your VAT return.

If you're employed, you can claim back tax relief on work-related expenses if you haven't been reimbursed by your employer. These are called tax-deductible expenses, and can be claimed for things like business travel and maintaining a work uniform. 

If you're only claiming a small amount, HMRC may repay the tax by changing your tax code.

Pension contributions

When you pay money into your pension, the government gives you a bonus in the form of tax relief. This means some of the money you would usually have paid as tax on your earnings goes into your pension pot instead. 

The rate of tax relief varies depending on your income tax band. 

Some workplace pensions will have a 'net pay' arrangement, where the pension scheme automatically claims back tax relief on your highest rate of income tax. 

But, more work might be required to get the full tax relief you're owed if the pension tax relief is applied at source. This is because only 20% tax relief is applied automatically, so those who pay income tax at a higher rate must actively claim for anything extra via a self-assessment tax return.

The tax relief is available on contributions up to 100% of your annual earnings, or £40,000 - whichever is lower. 

Charitable donations

If you make charitable donations straight from your wages or pension, you can get tax relief on the money you give. That's because the payments are made before tax, reducing your taxable income, and therefore your tax bill. 

If you're a higher-rate taxpayer, and make a charitable donation that qualifies for gift aid, you can claim the difference between the rate you pay and the basic rate on your donation. You can either do this via a self-assessment tax return, or by asking HMRC to amend your tax code

Working from home

During the pandemic the government relaxed the rules allowing millions of people who could no longer go to the office to claim tax relief worth up to £125 a year.

Here’s how it works. Your claim is based on the assumption that you incur costs of £6 a week while working from home, so you get back the tax that you would have paid on that sum.

For basic-rate taxpayers the relief is worth 20% of the £6: £1.20 a week. Higher-rate taxpayers can claim 40% of the £6: £2.40 a week. Over the course of the year, this means people could reduce the tax they pay by £62.40 or £124.80 respectively.

It's still possible to claim this tax relief for 2021-22; however, for claims for 2022-23, these rules are no longer relaxed. If you're employed, you cannot claim tax relief if you choose to work from home - or if you have an office you could work from. 

To make a claim, use HMRC’s online portal. If you pay tax by self-assessment, you’ll need to make a claim in your tax return.