Pay As You Earn, or PAYE, was introduced with the intention of simplifying the tax paying process. By and large it works effectively, but on occasion individuals are taxed more than they should be. Reclaiming your overpaid tax is relatively easy and, although the repayment may take some time, you will eventually get your money back.
Before contacting HMRC about overpaid tax, it's worth checking whether you've been on the wrong tax code by using our free Tax Code Explainer.
If You Are Employed
The method by which you reclaim overpaid tax will depend on your employment status. If you are employed, the process is remarkably simple. You should ask your employer for details of their Tax Office, and contact the them directly. You will need to explain why you think you have paid too much tax, and they may require you to forward documentary evidence or details of your employment. If your claim is upheld, your refund will simply be added to your wages. It should be noted that, in the event of a refund, you may also be given a new tax code. Information on understanding your tax code is available in our article What Is My Tax Code? on this site.
Not sure what your tax code means? Enter it here and get a plain English explanation of what it means, whether it is correct, and what to do if it is wrong.
Try our Tax Code Explainer free, here on this site →Benefit Claimants
If you are claiming a taxable benefit, including Jobseeker's Allowance or the taxable Incapacity Benefit, you will require your P45 form. Jobcentre Plus will be able to help you with your tax refund, but you will need to provide them with parts 2 and 3 of the P45 form. The date on which you receive your refund will depend on your circumstances. If you are receiving taxable Incapacity Benefit, you will be refunded after the following 5 April. If you are claiming Jobseeker's Allowance, you will receive your refund when you stop claiming, or on the 5 April following your application for a refund, depending on which comes first. If, on the other hand, you re-enter work within four weeks of your claim, your refund will simply be added to your wages.
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Retired or Unemployed
If you are retired, or have been unemployed for more than four weeks, the process is different again. In these cases, you will require form P50, which you will need to fill in and send, along with parts 2 and 3 of the P45 form, to your Tax Office. If your claim is upheld, you will be sent a cheque from the Office.
Self Assessment
If you are a Self Assessment taxpayer, the process is slightly more complicated. If you are making a claim concerning a tax return filed less than a year ago on which you made an error, you should simply write to your Tax Office explaining the situation. If, however, the claim relates to a return that was filed more than a year previously, you will have to follow a different procedure.
If you filed a return in the relevant year, you should inform your Tax Office in writing that you wish to claim error or mistake relief. Your tax affairs for that year will then be examined by HM Revenue and Customs (HMRC), and a payment may or may not be made. If you did not file a return in that year, the payment process will be quicker as HMRC will not examine your other affairs.
Receiving a repayment can be a lengthy process, but claiming should not be. Given that the benefits can be significant, you should consider making a claim if you think you have paid too much tax.
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