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Tax Rebate: How much am I entitled to?

21st September 2016 Print

Have you ever looked at your wage slip and wondered how nice it would be if you didn’t have to fork out all of that tax? Maybe even just for one month? That might be a pipe dream but sometimes you can enjoy a nice boost thanks to the taxman. Indeed, on some occasions, we pay more than we should. It’s at this point that the boot is on the other foot and it’s time for the taxman to pay up. 

So, how do you know if you’re due a rebate and, if so, how much you should be paid?

Understand tax so you can understand what you’re paying

First things first, it helps if you understand tax a little bit. You shouldn’t need to be a qualified accountant to be able to see what looks roughly like a right or wrong amount. Income tax, for example, is 20 per cent at anything above £11,000 (your personal allowance) and up to £43,000. Income above this is taxed at 40 per cent or 45 per cent if it’s above £150,000. 

That should give you a fairly simple calculation to work out and might help you to understand how much you’re owed back if you’ve been placed into the wrong band, say.

National Insurance is slightly harder to calculate but is 12 per cent of your weekly earnings between £155 and £827 and two per cent of weekly pay above £827.

To understand this – and how it will change slightly in future years – click here.

Why might I be owed a rebate?

The most common reasons for being owed a rebate come when you have either changed your personal circumstances during a tax year or have only worked for part of a tax year. Switching jobs or taking on a part time job as a student, for example, can easily see you put on the wrong tax code and this will lead to you paying more. If there’s any doubt about what tax code you should go on, you might be placed onto an emergency code and that could, as Which points out, see you pay 20 per cent tax on all earnings with no personal allowance.

As Tax Day notes, this could also occur when you leave the country or if you incur professional expenses that are not properly accounted for.

Where do I go to get the money?

If you’re lucky you will be contacted by HMRC directly with a P800 tax calculation. That will point you towards where you’ll be able to claim your refund online. These letters are normally sent out in September for the previous tax year.

Alternatively, if you think you’ve been missed off you can contact the tax office yourself, either online, by phone or in writing. You need to have your P60 and any P45s you may have been issued, National Insurance number and employment and benefit details for the tax year. 

How much will I be paid? 

The short answer is ‘it depends how much you’ve overpaid’. That’s why it’s important to understand your tax affairs a little more so that you can have a rough idea of how much you think you may have over-paid. The more you know, the more chance of knowing what you’re owed.

You can use an online calculator to attempt a more accurate estimation, provided you have your salary, benefits and tax figures for the full year to hand.

Rebates can range from a couple of hundred pounds for people claiming for professional expenses through to well over a thousand pounds for those who have been on the wrong tax code for months (or maybe even years).