What is a Tax Refund? - OurFinanceGuide

Most people have heard of folks getting tax refunds, otherwise known as a "tax rebate" or "claiming tax back" but what does it mean? A tax refund is a payment made by the HM Revenue & Customs (the new name for the Inland Revenue) to someone who has paid too much tax during a particular tax year. Tax years in the UK run from 6th April to the 5thApril, so the 2009/10 tax year started on the 6th April 2009 and will end on the 5th April 2010.

An individual is allowed to earn a certain amount each year before they are liable to pay tax. This amount increases each year and the figures for the last few years are shown below.

Tax year personal allowance:

2009/10: £6475

2008/09: £6035

2007/08: £5225

2006/07: £5035

2005/06: £4895

If you earned less than this amount (from all jobs) and have paid tax then you should be able to get your tax back in the form of a tax rebate. If you have earned over this then you could still be due a tax refund.

Why have I overpaid tax?

There are many reasons why this could have happened, perhaps your employer had you on the wrong tax code, and maybe you gave up work part way through a tax year and didn't get your full years allowances? You may also have had a couple of jobs and never been taxed correctly in either.

Will HMRC just send my tax refund to me?

Unfortunately not! You need to ask them for your tax rebate. You've got up to six years and after that it's gone and you will never be able to apply for your tax refunds after six years. Don't panic though because authorised tax agents can guide you through the whole process for free and help you claim your tax refunds. Alternatively for a small administration fee they can take the headache away and prepare your tax return on your behalf.