HMRC Tax Refunds: How to Get Refund in The UK

Refunding taxes is a great way to get some of your hard-earned money back from the UK Tax Office, also known as HMRC. Knowing how to claim a tax refund and what information you need to provide for them can be confusing. The HMRC Tax Regulator has a system in place that makes it easy to get your money back.

In this blog, we will discuss how to get a tax refund in the UK. We will cover topics such as what taxes you can be refunded, when and how to claim your refund, and how to avoid unnecessary fees when claiming a tax refund.

What Is Tax Refund?

A tax refund is a payment made to taxpayers by HMRC when they have paid too much tax. This can occur when an individual’s income or deductions change from one year to the next, resulting in overpaid taxes. It may also arise if someone has overpaid National Insurance contributions or if they are eligible for a refund of unused personal allowance.

This means that taxpayers who do not have a fixed income, such as freelancers or those with multiple jobs, are more likely to be eligible for tax refunds.

Another potential source of overpayment is where you have paid taxes on a pension or other income that was not taxable.

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What taxes are eligible for refunds?

The HMRC Tax regulator offers refunds for any taxes that may have been overpaid, including income tax, capital gains tax, national insurance contributions, and more.

Income tax refunds are the most common type of refund as they occur when an individual earns less than their personal allowances in a particular year. This can be due to changes in employment or other income-related factors.

Capital gains tax refunds are given if you make a profit or loss on the sale of certain assets, such as property or shares. This refund is only available if the total gain or loss falls within your annual tax-free allowance.

National Insurance Contributions (NICs) can also be refunded if an individual has paid too much in NICs for a particular period. Again, this usually occurs when someone’s employment or other income-related factors change.

When and How Can I Claim a Tax Refund?

You can claim a tax refund at any time during the year by filling out an HMRC Tax Return form. This can be done online, over the phone, or through the post. The deadline for submitting a claim is usually 31 January the following year.

Once you have submitted your claim, HMRC will assess it to see if you are eligible for a refund. If they agree that you are due a refund, the amount will be paid directly into your bank account within 28 days. It is important to note that any refunds owing must still be claimed within 4 years of the end of the tax year in which it was incurred.

What is the time limit for claiming back tax?

You have four years from the end of the tax year in which the overpayment arose to claim a refund, as shown below. If a claim is not made within the time limit, you will lose out on any refund that may be due.

  • Tax year 2018/19 (year ended 5 April 2019) – claim by 5 April 2023
  • Tax year 2019/20 (year ended 5 April 2020) – claim by 5 April 2024
  • Tax year 2020/21 (year ended 5 April 2021) – claim by 5 April 2025

How to Avoid Paying Unnecessary Fees?

There are many companies and organisations that offer tax refund services, some of which can charge a fee for their services. It is important to be aware of these charges as they can add up quickly and reduce your refund amount significantly.

The best way to avoid paying any unnecessary fees when claiming a tax refund is to do it yourself. HMRC offers an online service that allows you to easily submit your own claim, which gives you full control over the process and ensures that you are not paying any unnecessary fees.

Following are the steps that you need to follow to get a tax refund in the UK.

  1. Register for an HMRC Tax Account and register for Self Assessment.
  2. Gather all the relevant information that you will need, including your income, deductions, and National Insurance Contributions (NICs).
  3. Calculate how much you have overpaid using the online calculator.
  4. Complete the HMRC Tax Return form and submit it for review.
  5. Once approved, the refund will be paid into your bank account within 28 days.

How Long Does it Take for HMRC to Refund Tax?

It can take up to 28 days for HMRC to process and pay your tax refund. Once the refund is approved, it will be paid directly into your bank account.

If you have not received your refund within this time frame, it is best to contact HMRC directly, as there may have been a problem with the claim, or something has prevented them from processing it.

How to Apply for Tax Refund

The best way to apply for a tax refund is to use HMRC’s online Self Assessment system. This allows you to quickly and easily submit your claim and provides the convenience of having all the information in one place.

Additionally, by submitting your claim online, you can monitor its progress and see when it has been approved and processed.

When you submit your claim, you will need to provide information such as your income and deductions for the tax year in question. You will also need to provide details of any National Insurance Contributions (NICs) that you have paid.

Once this information has been submitted and approved, HMRC will calculate your refund amount and pay it directly into your bank account.

Following are the tips for individuals claiming a tax refund:

  1. Gather all the necessary information before you start your claim, such as income for the year in question and any deductions or NICs paid.
  2. Use HMRC’s online Self Assessment service to submit your claim, which will make it easier to track its progress.
  3. Make sure that you submit your claim within the four-year time limit.
  4. Regularly check your bank account for any refunds that may have been paid in.
  5. Keep track of all documents related to your claim, such as pay slips and P60s, as these can be useful when making a future claim.

Tips for SMEs:

  1. Keep track of all taxes paid throughout the year and ensure that any refunds are claimed within the four-year time limit.
  2. If you are outsourcing your tax return, make sure to use a reputable company or service.
  3. Make sure to submit accurate information when applying for a refund, as HMRC will carry out checks on claims.
  4. Keep all documents related to the claim for future reference, including details of any deductions or NICs paid.
  5. Monitor your bank account regularly to check for refunds that may have been paid in.

By following these tips, you can make sure that you are not paying more tax than necessary and make the most out of any potential tax refunds.

What can you get a tax refund on?

Tax refunds can be claimed for a variety of reasons, including:

  • Overpayment of tax due to changes in income or deductions.
  • If you have paid too many National Insurance Contributions (NICs).
  • If you are eligible for any tax reliefs or allowances.
  • If your employment status has changed during the year and you are no longer eligible to pay the same amount of tax.
  • If you have claimed any incorrect or redundant tax credits.

It is important to remember that refunds must be claimed within the four-year time limit, and inaccurate claims may lead to additional charges. Therefore, it is best to make sure all information is correct before submitting a claim.

What are the Benefits of Submitting a Tax Refund Claim?

Submitting a tax refund claim can provide several benefits, such as:

  • It can provide you with extra money, which can be used to pay bills or saved for a rainy day.
  • By claiming a tax refund, you can ensure that you are not paying more tax than necessary.
  • It will help to reduce the amount of debt owed to HMRC in case of any underpayment.
  • By submitting a claim online, you can monitor its progress and get notifications as to when the refund is paid.

Overall, submitting a tax refund claim can provide several benefits and ensure that you are not paying more than necessary. Therefore, it is important to check if there are any potential refunds available and submit a claim within the four-year time limit. 

What Happens If You Pay Too Much Tax?

If you have overpaid your tax, the best thing to do is to claim a tax refund. This can be done through HMRC’s online Self Assessment system.

When making a claim, it is important to make sure that all the information submitted is accurate, as incorrect claims may lead to additional charges. Additionally, make sure that the claim is submitted within the four-year time limit, as refunds are not available after this period.

Once your claim has been approved, HMRC will pay any refund due directly into your bank account. It is also important to remember that if you need access to your tax refund quickly, it is best to submit your claim online, as this will reduce the time taken for HMRC to process the claim.

By following these steps, you can ensure that any overpaid tax is refunded quickly and with minimal hassle. 

How Long Does a Council Tax Refund Take?

A council tax refund typically takes up to 28 days to process and be paid into your bank account. However, if you are submitting a paper claim rather than through the online system, it may take longer for HMRC to process your claim.

Once your refund has been approved, HMRC will pay it directly into your bank account within 28 days. You can check the status of your refund by logging into your HMRC online account.

Additionally, if you have any queries about the status of your refund claim, it is best to contact HMRC directly.

Finally, it is important to remember that if you need access to your tax refund quickly, it is best to submit your claim online, as this will reduce the time taken for HMRC to process the claim. Additionally, the online system provides more visibility and allows you to monitor its progress.

By following these steps, you can ensure that you get a quick tax refund with minimal hassle. 

Where to cash the tax refund cheque?

Once HMRC has processed your refund claim, it will be paid directly into your bank account. You can then use this money as you would normally, with no need to visit a bank branch or any other financial institution.

If you receive a cheque for the refund, it can be cashed at most banks and post offices. However, some banks and post offices may charge fees for cashing cheques, so it is best to check with your bank or local post office before cashing the cheque.

You can also deposit the cheque directly into your account, either at a bank branch or through online banking. It is important to remember that some banks may charge fees for this service, so check with your bank before you deposit the cheque. 

Final Thoughts

Claiming a tax refund can be an easy and stress-free process if you are aware of the relevant rules and time limits. By gathering all the necessary information beforehand, using HMRC’s online Self Assessment service to submit your claim, and monitoring your bank account for any refunds that may have been paid in, you can ensure that you get the most out of any potential tax refunds.

It is also important to be aware of any fees or charges that may be applied by third-party organisations and make sure you are not paying more tax than necessary. Following these tips can help you get the most out of your claim and ensure that any refunds due are received in a timely manner.

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