There are many reasons why you could be due a tax refund. Here we explain some of the most common.
1. You went in and out of employment a lot
If HMRC is unclear regarding your work history they may apply an ‘emergency’ tax code against your earnings and you could end up paying too much tax. In that instance, you would probably get charged 20% income tax on every pound you earn from that point on. For example, they may not be certain how much income you received and income tax you paid in a particular employment, especially if you failed to pass on your P45 from your previous employment (or from the Jobcentre if you claim JSA or ESA) to your new employer. Generally, HMRC would spot the mistake and start applying the correct tax code, issuing a tax refund directly through your wages within a matter of weeks. But sometimes the situation doesn’t get resolved. Enlisting the help of an experienced tax agent could help unblock the situation. If it turns out you paid more income tax than you should have, then you’ll be due some money back.
2. You changed addresses often and didn’t tell your employer or HMRC about it
Frequent address changes may contribute to you never receiving a P45 when leaving a job, which in turn would lead to your new employer not able to communicate to HMRC your exact tax position in that particular tax year. As in point 1, you may end up with an unwanted ‘emergency’ tax code…
3. You worked in the UK and returned to Australia within any of the last 4 years
Here we don’t mean going back ‘home’ for a holiday. We mean you lived and worked in the UK and you decided to return to Australia permanently (even if you ended up returning to live in Britain at a later date). If this was your case, you could be due some tax back because you probably didn’t use all of your personal allowance within the tax year during which you left the UK. The personal allowance is a set amount that everyone in the UK is entitled to earn tax free — the rate tends to change every year. Remember, you can claim some tax back provided you left the UK in the last 4 tax years and you actually paid tax while you were working. You could also claim some tax back if you leave the UK permanently in future.
Currently, anyone is entitled to claim back any overpaid tax, going back to April 2010. Obtaining a tax refund can sometimes be a long and complicated process, which may require the specialist knowledge of a tax agent registered with HMRC. An agent would normally assess your situation for free and take care on your behalf of all the paperwork and communications with HMRC. Most tax agents would only take a small fee out of your refund on a ‘no refund, no fee’ basis.
If you think any of the scenarios above apply to you, visit our website for more information or download a free tax rebate application pack.