How do I claim back tax I have overpaid through PAYE on wages?
This section looks at what to do if you have paid too much tax on your wages.
First, though, we look briefly at HM Revenue & Customs' (HMRC) P800 tax calculation process, which may mean you do not need to claim a repayment, as HMRC will issue any repayment automatically. If you have not received a P800 tax calculation from HMRC, and you have overpaid tax, you will need to make a claim for a tax repayment.
Your employer gives HMRC details of how much income you have received, how much tax you have paid and the value of any benefits-in-kind you have received during the tax year.
Using this information, HMRC carry out an automatic reconciliation at the end of each tax year to work out whether or not you have paid the right amount of tax, based on the information they hold. If HMRC think you have not paid the right amount of tax, they send you a P800 tax calculation. This calculation will show you what tax HMRC think you should have paid.
You must always check your P800 tax calculation carefully, as HMRC may not have all the information they need to calculate your tax correctly, or they may have inaccurate information. For example, they may not have information on certain employment expenses on which you are entitled to tax relief.
If you are due a repayment of tax your P800 should tell you whether you can claim your refund online, using your Personal Tax Account, or whether HMRC will send you a cheque. If you can claim your refund online, but do not do this within 45 days, HMRC should send you a cheque. Remember they will send this to the address they have for you on file. Make sure it is the correct one.
If you think you have paid too much tax, but you have not received a P800, you can claim a refund online using your Personal Tax Account. There is detailed information on using HMRC digital services, including how to access your Personal Tax Account in our Tax essentials section.
If HMRC think you have not paid enough tax, they will write to you explaining that they intend to collect the underpaid tax through your tax code or telling you how you can repay it to them.
For more information on what to do if you receive a P800 tax calculation, please read our detailed guide.
If you receive employment income and pay tax through the Pay As You Earn (PAYE) system you may sometimes pay too much tax. There are various reasons for this, such as being given an incorrect PAYE code.
If you think you have overpaid tax through PAYE in the current tax year, tell HMRC before the end of the tax year why you think you have paid too much.
You can do this online, using your Personal Tax Account.
If you prefer to telephone HMRC, the helpline for individuals and employees can be found on GOV.UK.
Before you telephone HMRC, you will need to gather together:
- your personal details – such as your full name, address, date of birth and National Insurance number;
- details of each of your employers – their PAYE scheme reference number, which should be shown on your payslip, or ask your employer for it;
- estimates of your earnings from each source for the current tax year.
Make sure you keep a note, in a safe place for future reference, of:
- the date and time of the phone call;
- the name of the adviser you spoke to; and
- what was said by both you and the HMRC adviser.
You may need to send in more information to support your claim and, if so, HMRC will let you know what paperwork you should supply.
Once HMRC process your claim it might be necessary to issue you with a new tax code, meaning any refund will be added to your wages and the amount will generally be paid automatically through the payroll. This will result in a lower tax deduction or a tax refund through PAYE.
However, if the repayment is due towards the end of the tax year and you have already received your final pay for that year, you may have to claim a refund directly from HMRC or wait for the P800 process to happen.
If you can arrange during the tax year to have your tax code changed correctly from an emergency code to a cumulative tax code, then your employer should arrange to reimburse any tax refund that is due through the PAYE system – in other words you should get the tax refund through your wages. If you remain on an emergency tax code at the end of the tax year, you can claim a repayment then.
You can read about emergency tax codes in our Working section.
If you have stopped work part way through the tax year and are not going to have a continuing source of taxable income – for example, you are not intending to go back to work within four weeks and will not claim a state benefit – you should be able to claim an in-year tax repayment using form P50.
You can apply online using the Government Gateway on GOV.UK to complete form P50, this means that you complete and submit the form on-line and should not need to send in copies of your P45 (the form that is given to you by your employer when you leave employment with them). However, if the details on your form P50 do not match HMRC payroll records then you may be asked to send HMRC parts 2 and 3 of your P45.If you do not use Government Gateway to complete Form P50 then you must send parts 2 and 3 of your P45 (see above) together with form P50 to HMRC. If you are entitled to a repayment of income tax, HMRC will send it to you – this may be by cheque in the post, or direct to your bank account if you so request.
You cannot use form P50 if you are claiming, or intending to claim, a state benefit such as jobseeker’s allowance (JSA).
If, for example, you stop work in June, having been employed at some point since the beginning of the tax year on 6 April, and you do not get another job but start to claim JSA, you will need to let Jobcentre Plus have parts 2 and 3 of your form P45 from that paid work. They will then input the details on to their system. If you have already paid some tax under PAYE in the year, you will not get this refunded until the earlier of:
- ceasing to claim JSA – in which case your refund comes from Jobcentre Plus;
- the end of the tax year – in which case, you have to liaise direct with HMRC for your refund.
If you have paid too much tax through your employment and the end of the tax year in which you overpaid tax has already passed, you can make a claim for a refund. You can do this online, through your Personal Tax Account (accessed through GOV.UK), or by writing to HMRC.
If you write to HMRC, mark the top of your letter clearly with ‘repayment claim’ so that HMRC prioritise it on receipt. Use the address on their website.
See ‘Where can I find more information and examples?’ below for an idea of how to write your letter and what you might include. But generally your letter, should:
- give your full personal details – your name, address and National Insurance number;
- include as much information as possible about your employment history – for example, PAYE reference numbers for your employers, dates of employment, how much you earned and how much tax was deducted;
- enclose copies of P60s and P45s if you have them – keep the originals;
- say why you think you are due a repayment;
- be signed and dated in ink.
Keep a copy of your letter and any enclosures and ask the Post Office for proof of posting in case of a later query.
HMRC say they usually aim to process PAYE repayments within five weeks of receipt. In some cases, HMRC will need to carry out security checks.
HMRC are repaying tax refunds electronically by reimbursing the amount directly onto the debit or credit card used to make your last tax payment. Contact HMRC if you do not want this to be the case, for example, if someone else used their card to pay your tax and you do not want them to get your refund.
It might help to speed up the repayment if you ask HMRC to pay it directly into your bank account. To request a direct bank transfer, include in the letter:
- the name of the account holder(s);
- the sort code; and
- the account number.
However, be aware that HMRC might want to make additional security checks if you request repayment into an account which is not in your own name.
In most cases you can get back the tax you have overpaid as long as you claim on time. The time limits for claiming a refund are shown in the introduction page of this section. If you fail to make a claim within the time limit, you will miss out on any refund due.
The time limits for claiming back overpaid tax are set out in the introduction page of this section.
Claiming back tax for 'closed' tax years – Extra-statutory Concession B41
The relevant part of the concession reads as follows:
‘However, repayments of tax will be made in respect of claims made outside the statutory time limit where an over-payment of tax has arisen because of an error by HMRC or another Government Department, and where there is no dispute or doubt as to the facts.....'
In our experience, it is rare for HMRC to grant this concession so you will need to set out clear evidence as to what the error was, which resulted in your paying too much tax.
We have produced some example letters you can use to write to HMRC regarding your own tax repayment.
There is more information on GOV.UK on how to:
- reclaim tax if you have overpaid through your job; and
- claim a tax refund when you stop work.