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Claiming Back Overpaid Tax

By: Chris Nickson - Updated: 30 Jul 2017 | comments*Discuss
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In theory it should never happen, but there are instances, and quite a number of them, when people do overpay their tax, even through a system like Pay as You Earn (PAYE), which was engineered to avoid this kind of situation.

The good news is that if you feel you've overpaid on your taxes this way, reclaiming the money is easy. There are companies that will do it for you - for a fee, of course - but you don't need them. The system is quite straightforward.

Why Might You Have Overpaid?

There are quite a few situations that can cause an overpayment of tax. If you started a new job and were given an emergency tax code, for instance, then you'll have overpaid until you received a permanent tax code.

If you only worked part of the year, you might well have paid too much, and the same applies if your employer used the wrong tax code for you (which does happen, sadly). Changing circumstances - retiring, or becoming self-employed or redundant - can mean an overpayment, as can stopping working and not receiving more income.

It can also happen if you have more than one job at a time, or you're getting other income which HMRC overtaxes via your PAYE. If you're a student who worked during the holidays but didn't fill out the proper form (P38S), then too much tax will have been withheld.

Finally, did you take a pension as a lump sum? If so, you might have been paying a higher rate of tax than was needful.

How To Reclaim

The ways you can reclaim depend completely on your circumstances - whether you're working for an employer, unemployed or retired.

Where you have an employer, explain the suspected overpayment to their tax people and provide documentation if necessary. It's perfectly possible that you'll require a new tax code, which they can provide. In this instance, where you've overpaid, the refund will come in your wages.

With unemployed people, there are two categories. Those who are simply unemployed can complete a P50 form then send it to the Tax Office, including Parts 2 and 3 of the P45, and they'll receive a refund in the post. However, for those unemployed who are returning to work in four weeks should do everything through their new employer, handing them the appropriate parts of the P45. In this case any refund will come through the wages.

But those who are unemployed and getting Jobseeker's Allowance or a taxable Incapacity Benefit fall into a different category. They will need to go to the nearest Jobcentre Plus with Parts 2 and 3 of their P45. The refund will come through after April 5.


Where you're retired and have taken a pension as a lump sum and you believe the rate of tax has been too high, then you'll need to fill out a P53 form and also give details of your estimated income for the year, sending both to your tax office. Any refund due will be posted to you.

Paying Too Much In Previous Years

If you think you've overpaid in previous years, you can supply proper documentation and contact your tax office. However, you need to be aware that the time limit for making a claim is six years.

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Madge - Your Question:
I have taken in a lodger and I have to do everything for him he does pay me for this but can I get free council tax and can I claim back what I have been paying

Our Response:
A lodger can affect your council tax, in that you may have to pay more. Whilst council tax is chargeable on the property, not per person, it may affect what you owe if you are currently living alone. People living on their own qualify for the single person's council tax discount of 25%. You can see more via the gov.uk linkhere.
UnclaimedFinances - 31-Jul-17 @ 2:07 PM
I have taken in a lodger and I have to do everything for him he does pay me for this but can I get free council tax and can i claim back what I have been paying
Madge - 30-Jul-17 @ 4:01 PM
Hi iv over paid my coucil tax and rent I think it's about £200 how can i claim it back I'm single and have two children Im my daughters full time carer.
jd - 28-Apr-15 @ 6:38 PM
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