If one was to make a list of two-word phrases that are universally popular, it might include bank holiday, fried breakfast, week off – and tax rebate. Almost always an unexpected surprise to receive through the post (not by emails, although fraudsters always try), the rebate is a lovely little monetary bonus that often occurs in the summer when the tax computations for the previous year have been totalled.
Some people are able to work out if they should be receiving one of these rebates before they even receive the news, with a little simple research. There are numerous reasons why you might be entitled to a tax refund – these include:
*Having too much tax taken from your pay
This is probably the most common reason, and there are numerous ways in which it could happen – It’s not always a mistake. It might be that you’ve changed jobs and dramatically changed salary. It could be that you’ve gone part-time but your tax code has not been altered to reflect this. Maybe certain allowances that you have, such as Marriage Tax Allowance, have not been taken into account.
*Stopped work
If you’ve stopped employed work during a given tax year, for whatever reason, then you may be entitled to a rebate. Bear in mind that the amount of tax you pay per month is based on the assumption that you will be working for the full year. If that suddenly stops, the amount you’ve paid already might therefore be too much. Even if you’ve stopped work in January or February, with only a month or two to go until the end of the tax year, you may be entitled to a slight rebate – although this might depend on any other benefits that you are receiving, such as Jobseeker’s Allowance.
*Sent too much tax
If you’re self-employed, or your work is a mixture of employment and self-employment, then you’ll probably have to complete a tax return yourself. Depending on your income and outgoings this can be a long and fractious process, fraught with possible error. Maybe you forget to include a certain source of income, or perhaps you’ve over estimated your payments on account – advance payments towards your next bill. Therefore, you might end up paying too much. You can ‘request a repayment’ online if you wish to have your return reassessed.
*Too much tax on pension payments
Starting a private pension is a smart idea, especially when your employer matches or betters your contribution to give you ‘money for nothing’ for your later life. However, it is sometimes possible to pay too much tax on your pension. Perhaps you’ve taken a lump sum from your pension that is a defined benefit or contribution scheme, but you’re still being taxed on a larger amount. There are many different forms that you might need to fill in, depending on your circumstances – click here to find out more.
Other reasons for a possible rebate include purchasing a tax annuity, paying on savings interest with a low income, or living in one country and having an income in another.
For more information, or to find out how much you should be paying, visit the MAS website.
