How to Get a Tax Refund If Overpaid Tax?

Tax Refund

January 09, 2021

Any taxpayer may overpay to Her Majesty’s Revenue and Customs (HMRC), and this applies equally to an employee, self-employed, or someone who owns a company. HMRC makes sure that everyone pays their taxes, but at the same time, it also doesn’t want anyone to overpay.

For refund of tax overpayments, there are procedures in place. However, the process is not automatic, and sometimes one needs to submit an application keeping in mind the refund criteria and deadline.

If you’ve overpaid tax, then you would be eligible for a tax refund from HMRC. Scenarios include:

  • - If the actual sales turn out to be less than the predicted Payment on Account amount, and you pay it without any reduction, then it is highly likely that you’ve overpaid tax.
  • - You started a new job but were put on an emergency tax code.
  • - The second job you are in applies Basic Rate tax to your entire salary. So, you lose some of your allowance entitlement.
  • - Your employer applies the wrong tax code, or HMRC has applied incorrect tax code to your PAYE.
  • - You are in the construction industry scheme.

Scenario wherein overpaid tax is automatically refunded:

At the end of the tax year, HMRC looks information from your employers such as your earnings, the value of any benefits-in-kind, and quantum of income tax you’ve paid.

Subsequently, you will receive a P800 tax notice, which will have a detailed calculation stating the amount of refund you will receive if you’ve overpaid income tax. It will be refunded to you in your next wage packet.

However, it is imperative to note that things, such as work expenses and allowances, are never refunded automatically. You need to claim these legally, and if you don’t, then you will not get your tax overpayment back.

Remedy if tax overpaid, and it isn’t refunded:

In such a case, one needs to use the self-assessment system, which is different from the PAYE system.

Depending on the ownership pattern, i.e., whether you’re self-employed, a sole trader or in a partnership there are various ways to set-up for self-assessment.

When you register online for the first time, you will receive a 10-digit unique taxpayer reference (UTR) number in a letter from HMRC. This UTR should be used to set up the online account of self-assessment through your Government Gateway account.

HMRC uses an additional security layer by posting the activation code within seven working days to your registered address. This code has to be applied when you sign in to your account for the first time.

Information that is needed to reclaim tax through self-assessment:

You will need the following:

  • - National Insurance number
  • - Income such as self-employed earnings, dividends and interest earned on shares
  • - P60 – which shows the tax already paid
  • - Any pension contributions and donations to charity for claiming tax relief
  • - Self-employed work expenses

The time-limit for reclaiming overpayment of tax:

You can claim a refund on your overpaid tax for up to four years. As we know in UK tax year runs from the 6th April to the following 5th April.

For example, for tax year April 6th 2020 to April 5th 2021, you can claim overpaid tax as far back as the 2016-17 tax year. However, you will not receive overpaid tax for this 2016-17 year later than April 5th 2021.

Timeframe for receiving overpaid tax from HMRC:


It takes about 12 weeks to process your tax rebate and another couple of weeks for your cheque to arrive.


Online claim: You will receive money in your bank A/c in five days.

Cheque: Within 14 days from the date your p800 is processed, you will receive the cheque from HMRC.

How can we help

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