What is a Tax Rebate?
A tax rebate is a refund of money from the governing body or organisation responsible for the collection of taxes after (re)calculation of taxes following a self-assessment or corrected / amended tax return where a balance is found to be in the tax payers favour.
Her Majestys Revenue and Customs (HMRC) issue your tax code, based on the information they receive about you. It is not unheard of for people to have spent years paying too much tax, but to have left it too late to claim back overpayments. Ensure that you are not one of those people! It is your responsibility to ensure that your tax code is correct. Please note there are time limits for claiming refunds, generally 4 years. I.e. If you want to claim for year 2011/12, the tax year ends on 5 April 2012 and so you have until 5 April 2016 to claim.
Overpaid tax through your job?
HMRC issue your PAYE (Pay As You Earn) tax code, based in the information they receive about you, your income and entitled allowances. Your tax code appears on your P45. There are several occasions where someone may have paid too much tax, such as starting a new job, not working a full tax year or having more than one job at the same time. As an employee, you can telephone or write to HMRC, advising why you think you've paid too much tax. If you are due a refund for this year, you will receive it in your wages. However, if it is for a previous year, HMRC will send a P800 Tax Calculation and any refund due, by September after the tax year. If HMRC has not notified or reimbursed you by September for previous years, you should contact them.
Overpaid through your pension?
If you use PAYE to pay tax on a company, state or personal pension, you may overpay tax if; your pension provider has the wrong tax code, your taxable income has reduced, you have multiple tax codes due to multiple pensions. You should receive a PAYE Coding Notice at the start of each tax year, which confirms what your tax-free allowances are. It should match your employment or payslip. (You have one for each pension you hold).
If you have just retired and have no pension income due, or any other taxable income at all during the tax year, you should complete form 'P50 Claiming tax back when you've stopped working' and send it to HMRC with Parts 2 and 3 of your P45. (Keep Part 1 safe, as it is a record of your income). HMRC will send any refund due to you, in the post.
If you do receive a taxable pension through PAYE and the code is wrong for the current tax year, you should contact HMRC, who will send an updated PAYE Coding Notice to your pension provider. They in turn will adjust your tax code to alter future payments. Overpayments will be corrected by your pension provider who will refund the tax in the next payment, resulting in a reduced tax payment the following month or a refund if it is a large amount (marked R on your payslip). If you wish to claim for a previous year, telephone or write to HMRC (for the tax years from 6 April 2010), who will send you a P800 Tax Calculation and any refund due.
From 6 April 2013 lump sum payments are taxed at the basic rate. You have the option to take all of your pension as a lump sum, if it is small, rather than using it to get a small regular pension. However, if you've received one or more lump sum payments prior to 6 April 2013, you may have paid too much tax. To apply for a refund, contact the Taxes Helpline ask for a form P53 repayment claim. Once completed, send it to HMRC with Part 2 and Part 3 of your form P45, keep P45 Part 1A as a record of your income.
The tax year runs from 6 April to 5 April and if you ceased work part way through the year, you might have paid too much tax. Or, if you were self-employed and made 'payments on account' of your next year's tax bill, you might have paid more tax than you had to. If you are made redundant, you should contact HMRC, who may give a tax refund during the tax year.
You won't be able to claim a tax refund immediately if claiming Jobseeker's Allowance, taxable Employment and Support Allowance or taxable Incapacity Benefit, as these benefits are taxable and affect any refund that you can claim. Give Parts 2 and 3 of your P45 to the Benefit Office to and keep Part 1A for your own records.
If receiving Jobseeker's Allowance, the Benefit Office should pay any refund due after the end of the tax year. However, if you stop claiming Jobseeker's Allowance before the end of the tax year, the Benefit Office will pay any refund you're entitled to after you've stopped claiming.
If in receipt of Incapacity Benefit or Employment and Support Allowance, you will get any refund you're entitled to after the end of the tax year or after you've stopped claiming.
If you start a new job within four weeks of finishing your old one, give your new employer the P45 Parts 2 and 3, keeping Part 1A for your own records. The employer will then pay any refund you're due within your pay from your new job.
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