Tax Rebates & Refunds

What are tax refunds? And more about them

January 28, 2011
Posted in Tax Rebates — Written by Jennifer

An income tax refund is a return of the excess tax that you may have paid. If you have paid excess tax relating to your job or pension, then HM Revenue and Customs will repay you. This repayment will come to you in the form of a cheque, internal bank transfer or through your salary. Currently, HMRC will repay you for excess tax payments over the previous six years.

In what situations may you have paid excess tax?

Sometimes employers mistakenly use the wrong tax code for calculating your taxes, and you may have had to pay excess tax as a result. When you get a new job, you may have to deal with an emergency tax code for a short period of time. If you worked for only a part of the year and paid taxes for the full year, then you could also be eligible for a refund.

In some cases an individual may have two jobs at once, and hence tax code application may have gone wrong. Another reason could be that you simply made a mistake on your tax returns or HMRC made a tax calculation error.

The tax office applies tax codes which enable your employer or pension provider to calculate the exact amount of tax applicable. This tax is taken off before your salary is given to you.

If excess payments of tax have been made by you then HMRC will send you a new tax code. Your employer will pay you the refund or HMRC will send you the refund amount via a cheque in the post or direct transfer to your bank account.

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