ALMOST six million workers received hundreds of pounds of overpaid tax back last year, The Sun can reveal.
Employed workers received rebates worth a total of £3.57billion in overpaid tax last year, a freedom of information (FOI) request by The Sun to HMRC found.
With almost 5.5million workers paying more than they should last year, the average overpayment is worth £661.
The main reason people end up overpaying is because they are in the wrong tax code, accounting company RSM UK told The Sun.
Anyone employed or paid via PAYE is given a tax code by their employer via HMRC and it is shown on your payslip.
This code dictates how much income tax you pay on your earnings – so it’s important to check if you’re on the right one.
People are often put on the wrong tax codes if they change jobs.
At the end of each tax year on April 5, HMRC sends letter out to tell people if they have overpaid or underpaid tax – these are known as P800 letters.
But even those who are proactive and check their code before these letters are sent out may find themselves unable to get it sorted quickly, as the taxman is often overwhelmed with demand.
Customer services at the government department was found to be at all-time lower earlier this year, with phone line waiting times the worst affected.
This will is likely to have contributed to the increase in tax repayments by HMRC, Paul Slokan, associate director at RSM UK said.
“Due to wait times it can be difficult for taxpayers and agents to contact HMRC and request changes are made to coding notices so taxpayers may wait until the P800 is issued to claim any repayments of tax.
“If you have a Personal Tax Account with HMRC you can change your PAYE code online, but this is not helpful for those digitally excluded taxpayers.”
Elderly or disabled people may find themselves in this category.
A change to the self-assessment threshold may have also contributed to the increase tax rebates.
The self-assessment threshold for taxpayers taxed through rose from £100,000 to £150,000 in the last tax year.
This means more taxpayers affairs are being dealt with via the P800.
Meanwhile, around 2.94million repayments were issued to people who filed self-assessment tax returns over the same period totalling £8.36billion, our FOI found.
There are several reasons why you might be on the wrong tax code, including if you’ve started a new job and HMRC has not received your income details in time.
You might also be on the wrong code if you’ve started working for an employer after being self-employed, or you’re working more than one job at a time.
If you are on the wrong code, the tax office will often put you on an emergency tax code until you contact them about changing it.
Bear in mind, in some cases you might have been put on the wrong tax code and be underpaying and owe HMRC money.
In any case, you’ll want to correct it when you can so you’re paying the right amount going forward.
Sarah Coles, personal finance analyst at Hargreaves Lansdown, said: “It’s a relatively straightforward process and this money is rightfully yours, so don’t hang about – make a claim as soon as you can.”
You can check your tax code on your online personal tax account, via payslips, or on the HMRC app.
You can also, if you’ve received one, check your code on a “Tax Code Notice” letter from HMRC.
You’ll need your Government Gateway ID and password to log in to your online personal tax account.
If you don’t have this you can use your National Insurance number or postcode and two of the following:
If, after checking, you think you’re on the wrong tax code, you can contact HMRC to tell them via phone on 0300 200 3300.
This is usually the quickest way to get a response.
Or, you can send a letter to the following address: Pay as You Earn and Self Assessment, HM Revenue and Customs, BX9 1AS, United Kingdom.
If you are on the wrong tax code and have been paying too much, HMRC will change it so you pay the correct amount moving forwards.
They should also reimburse any tax you’ve already overpaid.
If you’ve been underpaying tax, you will usually have to pay the money back over 12 months.
But, only if you are earning enough over the personal tax allowance (£12,570) to cover the underpayment and owe less than £3,000.
HMRC might get in touch with you to tell you you’re owed a tax rebate too – they’ll do this via a P800 letter or a simple assessment letter in the post.
But again, a P800 might tell you if you’ve not paid enough tax and have to pay it back.
A P800 letter will tell you if you can claim online through the Government’s website, in which case you’ll need your Government Gateway ID and password.
If you claim the money online it will be sent to your bank account within five days.
You can also claim your refund through the HMRC app.
If your P800 letter states you will be paid your tax rebate via cheque in the post, you should receive it within 14 days of the date on your letter.
If you’re owed tax from more than one year, you’ll get a single cheque for the entire amount.
There are time limits in place to reclaim any overpaid tax, which is currently four years from the end of the tax year in which you are trying to claim.
So, if you’re in any doubt you’ve overpaid tax, you should contact HMRC as early as possible.
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