What if I pay too much tax?

Updated on 17 January 2019

This section looks at what to do if you have paid too much tax on your employment income and what the time limits are for making a claim.

When might I get a tax refund automatically, and when might I need to claim one?

If you are an employee, HM Revenue & Customs’ (HMRC) reconciliation system should aggregate your pay and tax details after the end of the tax year and HMRC may issue you with a tax repayment automatically. You should also receive a P800 tax calculation. It is important that you check the calculation and that the repayment is correct. If you receive a P800 calculation, you might not need to claim a refund of tax.

You can find out more about P800 calculations in our section ‘What if I do not pay enough tax?’

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What do I do if my P800 shows I’m due a refund?

If your P800 calculation shows that you are due a refund, HMRC will ask you to provide them with bank details to make the refund direct to your bank account. If you do not do this, some weeks later they will issue a cheque to the address that they hold on their records.

Before you accept any refund, make sure the repayment is correct, because:

  • The P800 calculation is only an estimate, produced by HMRC’s computer. So the calculation is only as good as the data held on the computer.
  • HMRC might have got something wrong, so the repayment could be too much or not enough.
  • If HMRC repay you too much and you do not tell them, they could charge you a penalty, if they think you were careless in not spotting the over-repayment. Of course, you would also have to send back the amount overpaid to you.

Are you owed tax of less than £10 or do you need to make a claim for other tax relief from HMRC?

If you are due a repayment of less than £10, HMRC only repay it to you if you submit a claim – their computer does not automatically issue it. You might not get a calculation, because according to HMRC’s computer, you are not due one.

But you might be entitled to some extra allowances or reliefs, that HMRC have not given you. In that case, you need to write to HMRC to tell them that you think you are entitled to them. 

Example letters to help with tax repayments can be found in the ‘example letters and guides section’.

Earlier years’ repayments

If HMRC thought you were due tax back for the years 2014/15, 2015/16 or 2016/17, they have probably already sent it to you. But if not, it might be worth checking whether you are due anything back, particularly if you have discovered you have not claimed enough allowances or other tax reliefs in 2017/18 and the same applied to earlier years.

There are example letters, which, adjusted for the relevant tax year(s), might help you to claim a repayment.

Repayment claims have time limits, so do not delay. But do be careful – if it turns out that you have not paid enough tax in previous years, HMRC might be obliged to collect it if you prompt them to review your situation. So get your facts straight first.

Time limits for claiming repayments are:

Tax year 2014/15 (year ended 5 April 2015) – you must claim by 5 April 2019
Tax year 2015/16 (year ended 5 April 2016) – you must claim by 5 April 2020
Tax year 2016/17 (year ended 5 April 2017) – you must claim by 5 April 2021
Tax year 2017/18 (year ended 5 April 2018) – you must claim by 5 April 2022

In cases of ‘official error’, HMRC might agree to issue repayments for years prior to 2014/15 under their ‘Extra-statutory Concession B41’. For more information on this concession, including example letters, go to the page ‘How do I claim back tax I have overpaid through PAYE on wages or pensions?’.

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How do I claim a refund for the current tax year?

If you receive employment income or pension income and pay tax through the Pay As You Earn (PAYE) system you may sometimes pay too much tax. There are various reasons for this. We look at some typical reasons in our P800 calculation factsheet.

As stated above, if you are an employee, HM Revenue & Customs’ (HMRC) reconciliation system should aggregate your pay and tax details after the end of the tax year and HMRC may issue you with a tax repayment automatically. But what if you do not want to wait for a P800 calculation, or if you think you will not receive a P800 calculation?

There is more information on what to do if you are still working but you think you have overpaid tax through PAYE in the current tax year in the 'tax basics section'.

This includes detail on the information you need to gather together before contacting HMRC and what records you should keep.

See also the question below, ‘How will I get my emergency tax back?’.

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How will I get my emergency tax back?

As explained in our ‘How do I check my coding notice?’ section, if you cannot produce a form P45 when you start a new job, your employer will ask you for new starter information. This enables your employer to pay you without a proper tax code in place, however it can mean that you overpay tax. As soon as your proper tax code is confirmed, and provided the tax year has not ended, the payroll should make the relevant adjustments to repay any overpaid ‘emergency’ tax in-year.

Example

Emily starts a new job in September 2018. She lives in Wales, has not got a form P45, but has been working earlier in the year. She completes the new starter information checklist, and her new employer uses 1185L M1 as an emergency code.

So, each month under 1185L M1, Emily is allocated one-twelfth of her personal allowance.

September

She starts off in September with £988 of allowances (£11,850 divided by 12). She earns £2,000, so her tax liability is £202.40 (£1,012 at 20%).

October and November

In October and November, she gets another £988 of allowances in each month. Again she earns £2,000 each month, so her tax liability is £202.40 each month.

December

In December, Emily does not work as she is on holiday. HMRC confirm to Emily’s new employer, that in her first job she earned £4,500 and paid £500 tax and that her normal tax code is 1185L.

As the M1 restriction has now been removed, Emily’s pay and tax details can be worked out on a cumulative basis. Her employer adds together all her pay to date in 2018/19 (£4,500 plus £6,000), which totals £10,500. The employer works out how much tax free pay Emily should have had by this point in the tax year (£988 x 9 = £8,892). Emily’s tax liability to date is therefore £1,608 x 20% = £321.60. Emily has paid tax of £500 plus £202.40 x 3 = £1,107.20. Emily will get a refund of £785.60 through the payroll in December.

January, February, March

As the wrinkle has been ironed out, going forwards, Emily will have £988 to set against her monthly income of £2,000, resulting again in tax liabilities of £202.40 each month.

At the end of the tax year, Emily’s total income will be £16,500. Her total tax paid will be £928.80. If we set Emily’s personal allowance (£11,850) against the £16,500 and apply the 20% basic rate of tax to the balance, we can see that Emily paid the correct amount of tax.

If this payroll adjustment does not happen before the end of the tax year, then HMRC’s ‘P800’ reconciliation system should aggregate your pay and tax details after the end of the tax year and HMRC should issue you with any tax repayment automatically.

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How do I claim a refund if I have spent my own money on employment expenses?

First things first, you should make sure that your expenses qualify for tax relief. You can find out more about expenses that you can claim for on our website

Even if you meet the rules, you need to make sure you have paid enough tax to get tax relief. In 2018/19, you will pay tax on your earnings over £11,850 (your personal allowance – for more information on allowances, see: What tax allowances am I entitled to?).

Example

Josie earns £12,000 in 2018/19. After the personal allowance is deducted, she will have taxable income of £150, which at 20% means that she will pay £30 tax. She has qualifying expenses of £100 which she has paid for from her salary. By putting in a tax claim for this, she will not get the £100 back from HMRC, but will get the tax back that she has paid on the £100. As she has paid tax at 20%, this will be £20. Even though she will also have paid 12% National Insurance on the £100, there is no National Insurance relief available.

If Josie’s expenses were £200, her tax claim would be restricted to £150 and her refund restricted to £30.

To get tax relief, you have to make a claim to HMRC, but it is not difficult to do so. If you do not usually have to complete a tax return, a claim can be made on form P87. There are two versions available from GOV.UK:

  • A P87 you can complete and submit online.

    You will find this form in your Personal Tax Account in the PAYE/current year/check your income tax estimate section. To find out how to access your Personal Tax Account, see our website guidance on HMRC’s digital services.
     
  • A P87 that you complete on screen but still have to print it off and post it to HMRC. So you need to have your printer and paper on standby!

    You cannot save a copy of the form and come back to it partly completed. Make sure you have all information to hand before you start, including:
    • The tax year your claim refers to.

    • Your personal details including address, date of birth, and National Insurance number.

    • Your employer’s details including name, type of business, address and employer reference number (you will find this on your payslip or P60). If you changed jobs during the year, you might need details for all relevant employments. If you do not have the ‘employer industry’ or your ‘employee number’ you should insert ‘unknown’ otherwise you will not be able to progress.

    • Details of the expenses you wish to claim e.g. the number of business miles you have travelled.

    • Repayment instructions – that is, the bank account which you want it paid directly into (with bank name, address, account name, sort code, account number) or the address you want a cheque to be sent to (you can also have it paid to a nominee).

If you need further help understanding and completing the form, you can find more information and also an annotated example of form P87 in the ‘Forms’ section of our website.

If you would prefer a paper version of form P87 to complete by hand, then you will have to ring HMRC’s helpline and request that one is sent out to you.

There are plenty of organisations which offer to make the claim for you, but they'll take a fee from any repayment you get.

Where the amount of employment expenses exceeds £2,500, then the tax refund claim must be made through the completion of a more formal Self Assessment tax return.

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How do I claim a refund if I have stopped working part way through the tax year?

If you have stopped work part way through the tax year and know that you are not going to have a continuing source of taxable income, you should be able to claim an in-year tax repayment using form P50.

You may also be able to use form P50 to claim a refund where you become unemployed and know that you definitely will not be working again for at least four weeks. If you start work again some adjustments may be needed over the rest of the tax year to take into account the fact that you have already had an in-year refund.

You can complete form P50 online, which also means that you should not need to send in copies of your P45 (the form that is given to you by your employer when you leave employment with them). However, if the details on your form P50 do not match HMRC payroll records then you may be asked to send HMRC parts 2 and 3 of your P45.

If you do not complete form P50 online then you must send parts 2 and 3 of your P45 together with form P50 to HMRC. If you are entitled to a repayment of income tax, HMRC will send it to you – this may be by cheque in the post, or direct to your bank account if you so request.

You cannot use form P50 if you are claiming, or intending to claim a state benefit such as jobseeker’s allowance (JSA).

Instead, if you start to claim JSA, for example, you need to let Jobcentre Plus have your form P45 from your paid work. They will then put the details onto their system. If you have overpaid tax under PAYE, you will not get this refunded until the earlier of:

  • ceasing to claim JSA – in which case your refund comes from Jobcentre Plus;
  • the end of the tax year – in which case your refund should come from HMRC.

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How do I claim a refund if I leave the UK part way through the tax year?

If you are not a Self Assessment taxpayer, and are leaving the UK to live abroad permanently or are going to work abroad full-time for at least one full tax year, you might be able to claim a refund by completing form P85 ‘Leaving the UK – getting your tax right’ to HMRC. You can find the form on the GOV.UK website.

If you are leaving the UK temporarily, then see the guidance in our ‘What if I work abroad temporarily?’ section.

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How do I claim a refund after the end of the tax year and for previous tax years?

If you think you have paid too much tax through your employment and the end of the tax year in which you overpaid tax has already passed, you can make a claim for a refund by contacting HMRC.

There is more information on how to do this, including example letters, in the ‘tax basics section’.

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What are the time limits for claiming back overpaid tax?

The time limits for claiming back overpaid tax are set out in the 'tax basics section'.

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What can I do if I am too late to make a claim for repayment?

There is information on what to do if you miss the normal time limits for making a claim for repayment of tax in the ‘tax basics section'.

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Where can I find more information and examples?

There is information on the GOV.UK website on:

Those who are due a refund because of employment expenses, may find our recent news article useful.

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