Be it an accounting mistake or improper knowledge of tax regulations, you can pay more tax than legally required. This is known as an overpayment, and you can claim a tax refund from the HMRC to get the overpaid amount back.
So, how do you claim a tax refund? You can claim a tax return before or after completing tax returns. After completing tax returns, HMRC generally processes the refund automatically. But if you haven’t completed the tax return, you must manually claim a refund.
In this guide, we will discuss crucial topics regarding tax refund claims. Let’s begin.
Tax Refund and Its Types
A tax refund refers to repayment from the HMRC if you have overpaid taxes. The tax overpayment can be in any of the following categories or others.
- Your earnings from a job
- Any expenses related to the job
- Pension incomes
- Income of individuals living outside the UK
- Savings or PPI interests
- Any foreign income
If you think you have overpaid tax in any category, move on to the next section, where we show you how to claim a tax refund in London, UK.
How to Claim a Tax Refund?
Before claiming a refund, you have to ensure you overpaid tax. To figure this out, you must figure out your tax liabilities.
Step 1: Determine Your Tax Liabilities
Tax liability means the amount of tax you are due in a financial year. Sum all taxable incomes (before deducting the tax) to get your gross income in that year. Then, use the current tax rate to calculate your due tax.
Step 2: Compare Tax Liabilities With Paid Tax
As you have already paid tax, you should have the necessary documents that mention how much you have paid in tax. Checking any of the following documents may help:
- P60, P45, or/and P11D forms
- Bank statements
- Dividend certificates
Deduct the tax liability from the paid tax amount to determine how much you overpaid.
Step 3: Claim a Refund Within the Deadline
Once you know about the overpayment, go to the HMRC website to claim a refund online. You can also claim a refund through a physical application. Whatever method you choose, you must claim within four years. The timeline starts from the date when the associated tax year ended.
Say you are claiming a refund on an overpayment made in the 2021-22 tax year. This tax year ended on April 5, 2022. So, you must claim the refund by April 5, 2026.
An investment in knowledge pays the best interest,’ and understanding allowable limited company expenses is a key investment in your business’s financial success.
Can I Claim a Tax Refund After the Deadline?
Yes, but only in exceptional cases. Once the four-year deadline ends, you can still claim a tax refund according to the Extra-statutory Concession rule. You will only be eligible for a refund if the tax processing had an error on the part of the HMRC. Otherwise, your tax refund claim will not be successful.
Tax Refund Timeline
It depends on the system you use to pay the tax and the HMRC requirements for security checks. Depending on these factors, getting a refund may take 5 to 60 days. Here are the possible cases for the timeline.
Getting a refund through the P800 will take five working days. Remember, you must contact the HMRC through your PTA to start this process. Otherwise, you will get a cheque within 60 days.
If you don’t have the P800 option, it will take about 14 days to get the refund cheque.
We Can Help!
You might have already learned how to claim a tax refund. If you aren’t confident enough to do it alone, we will be happy to help. At TaxNest, our accountants are highly experienced in processing tax refund claims. We can meticulously inspect your tax documents and liabilities to claim for refunds accurately.
We promise to get you the refund you are entitled to within the shortest possible time. If you are confused, need clarification about the process, or want to get it done by us, let us know
