Thousands of people in the UK every year are paying more money than they should be in taxes. Sometimes, HMRC will notice and will issue you with a rebate, but this is very rare. Instead, it’s more likely that unless you keep a track of the tax you are paying, you’ll never get back overpaid taxes.
To help you be more proactive with checking your taxes, here are three simple ways you can find out if you’ve overpaid on tax (which means you could be eligible for a rebate : )
- Check your tax code. The main cause of overpaid taxes is an incorrect tax code. This can happen for many reasons but it is important that you check it. As a general rule of thumb, for the 2012/13 tax year, your tax code should be 801L for under 65’s 1050P for people aged 65-74 (assuming income is less than £24,000) and 1066Y for people aged 75+ (again, assuming income of less than £24,000). If this isn’t correct, contact the tax office immediately so that they can look into it.
- Use a tax calculator. You can use a simple online tax calculator like How Much Tax Will I Pay to work out how much you should be paying. Do it with and without your tax code and make sure you complete all the relevant fields like pension contribution, whether you have a student loan/are blind/don’t pay National Insurance etc. Do it without entering your tax code and see how much you should be paying in tax and if it’s wrong, you have a strong case to take to HMRC.
- Check your P60. Once you have your results from an online calculator, you can compare the total tax you should have paid to the amount you actually did pay on your P60. If there is a discrepancy, contact HMRC and make sure to send them any documentation or evidence to back up your claims.
These three simple steps should be more than enough for you to figure out whether you’ve been overcharged by the taxman and you can usually expect a response and decision back from them within 6-8 weeks.
Also, be wary of firms offering to claim back the tax on your behalf as they will be profiting off you by taking a cut. You can easily do it yourself and, in theory, you could claim for overpaid tax as far back as 2003 – which could result in quite a large rebate cheque.
Ian is a tax geek who built How Much Tax Will I Pay to help people check their wages to make sure they are paying the right amount of tax. If you have any feature suggestions or bug reports, you can contact him on Twitter.