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From 6 January 2024, the main rate of class 1 National Insurance contributions (NIC) deducted from employees’ wages is reduced from 12% to 10%. From 6 April 2024, the main rate of self-employed class 4 NIC will reduce from 9% to 8% and class 2 NIC will no longer be due. Those with profits below £6,725 a year can continue to pay class 2 NIC to keep their entitlement to certain state benefits. Our guidance will be updated in full in spring 2024.

Updated on 6 April 2023

PAYE tax refunds

This page looks at what to do if you have paid too much tax on your employment or pension income. It also looks at what to do if you want to claim a tax relief for employment expenses.

Content on this page:

Overview

If you receive employment income and/or pension income and pay tax through the Pay As You Earn (PAYE) system, you may sometimes pay too much tax.

In many cases at the end of the tax year, too much tax has been paid simply because of the way the PAYE system works and no-one is ‘at fault’.

PAYE tax refunds most commonly arise from the following circumstances:

  • If you work for less than the complete tax year – for example, you only started working during the tax year, or you stopped working during the tax year – this could result in you being on an emergency tax code for a while
  • You had more than one source of PAYE income at the same time
  • If you have been working on a casual basis
  • If you are a student, you work only in the holidays
  • Your employer or pension provider was using the wrong tax code
  • Other income which HMRC tax through your tax code has reduced
  • Your circumstances changed, for example you changed from full-time to part-time work
  • If you are a pensioner, the amount of state pension in your tax code is wrong
  • If you are a pensioner, you paid too much tax on a pension lump sum

In some of these circumstances, you will probably only have received part of your tax-free personal allowance under PAYE when actually you are entitled to a full year’s amount.

If you are a pensioner, you might overpay tax under PAYE because of an emergency tax code where you take money flexibly out of your pension – see our separate guidance on flexible pensions for more information. If you have overpaid tax and you have taken a lump sum from a defined benefit scheme (sometimes known as trivial commutation), look at our separate guidance on trivial commutation and small pensions.

Below is a further example of how a PAYE tax refund might arise.

Example: Luke

Luke is on a zero hours contract and is paid weekly. Luke’s last payslip in the 2022/23 tax year (dated 16 March 2023) indicated he had earned £14,560 and paid £556.20 in tax. On 17 March 2023, his employer told Luke there was no work for the foreseeable future.

At the end of the 2022/23 tax year Luke’s tax position is:

Earnings £14,560

Less PA £12,570

Tax owed: £1,990 @ 20% = £398

We can see that Luke has overpaid £158.20 in tax (£556.20 less £398). This is because up until 11 March (week 50 of the tax year), Luke had only been given 50 weeks’ worth of his personal allowance (£12,087), whereas he was due £12,570.

Automatic repayments

In many cases, HMRC’s automatic 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.

P800 tax calculations are usually issued in the summer months following the end of the tax year. But what if you do not want to wait for a P800 calculation, or you don’t receive a P800 calculation for the year in question?

If you have paid too much tax through your employment and the end of the tax year in which you have overpaid tax has passed, you should be able to prompt HMRC to reconcile your position/issue your refund by contacting them. There is more information on how to do this below.

There is more information on what to do if you think you have overpaid tax through PAYE in the current tax year below.

P800 shows a refund is due

If your P800 calculation shows that you are due a refund, it should also tell you whether you can get your refund paid via an online bank transfer, using your Personal Tax Account, or whether HMRC will send you a cheque. If you can get your refund online, but do not do this within 21 days, HMRC should send you a cheque.

HMRC say a cheque, via this route, can take up to 6 weeks to issue. If you are only eligible to get your refund by cheque, it should be less time. You should make sure HMRC have an up-to-date address before HMRC issue a refund via cheque.

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

  • The P800 calculation is only an estimate, produced by HMRC’s systems. As such, the calculation can only be as good as the data held on their systems.
  • 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.

Small repayments

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

See below for more information on how to do this.

Earlier year repayments

If HMRC thought you were due tax back for the years 2019/20, 2020/21 and 2021/22 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 2022/23 and the same applied to earlier years.

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. You should therefore get your facts straight first.

Note that P800 calculations are cumulative. This means if you receive more than one, the previous years’ balances are taken into account and automatically included in the next year’s calculations.

For the actual amount you should look at the calculations on the P800 from the final year of your tax claim, as this will include everything from the previous years.

Example: Jenny

Jenny submitted a tax refund claim for uniform expenses over the past four years, and is owed £12 in total for each year – a total of £48.

Her P800 calculations for each of the four years she is claiming for would be:

Year 1: HMRC owes you £12
Year 2: HMRC owes you £24 (£12 from this year and £12 from last year)
Year 3: HMRC owes you £36 (£12 from this year and £24 from last year)
Year 4: HMRC owes you £48 (£12 from this year and £36 from last year)

But she is not owed £120 (£12 + £24 + £36 + £48), she is only owed £48: the cumulative amount shown on the last P800.

Claiming in-year

If you think you are overpaying tax through PAYE in the current tax year (2023/24), then it is likely there is a problem with your tax code. If you are still working or receiving a pension, you should tell HMRC why you think you have paid too much before the end of the tax year.

You can do this online, using your Personal Tax Account.

If you prefer to telephone HMRC, the helpline for individuals and employees can be found on GOV.UK.

Before you telephone HMRC, you will need to gather the following:

  • your personal details – such as your full name, address, date of birth and National Insurance number,
  • details of each of your employers or pension providers – their PAYE scheme reference number, which should be shown on your payslip, or ask your employer or pension provider for it, and
  • estimates of your earnings and/or pensions from each source for the current tax year.

Make sure you keep a note, in a safe place for future reference, of:

  • the date and time of the phone call,
  • the name of the adviser you spoke to, and
  • what was said by both you and the HMRC adviser.

HMRC may already have everything they need to check your position, but you may need to send in more information – if so, HMRC will let you know what paperwork you should supply.

Once HMRC process your information it might be necessary to issue you with a new tax code, meaning any refund will be added to your wages or pension and the amount will generally be paid automatically through the payroll. This will result in a lower tax deduction or a tax refund through PAYE. It is a similar process to getting your emergency tax back – see below.

If the repayment is due towards the end of the tax year and you have already received your final pay or pension for that year, you may have to claim a refund directly from HMRC once the tax year has ended or wait for the P800 process to happen.

If you were working, but have now finished working and won’t have a continuing source of income, for example because you have become unemployed, are returning to studying or are leaving the country, see below to find out how to claim your tax refund. The form to use to claim a repayment depends on your circumstances.

For guidance on your refund position if you stop work because you are made redundant, see our page on Redundancy.

If you are retiring, whether you are due a refund in respect of your paid work will largely depend on if/how you choose to take any pension/pensions you may have. As there are so many options, it will be hard to know what your overall refund position will be at the point you stop work, as this will depend on what happens next.

It may therefore be best to wait until the end of the tax year in order that a full reconciliation of your tax position can be performed.

Claiming after the end of the tax year

If you have paid too much tax through your employment or pension and the end of the tax year in which you overpaid tax has already passed (and you have not received a P800 or need your refund urgently and can't wait for your P800), you can make a claim for a refund. It is probably easiest to do this by writing to HMRC.

If you write to HMRC, mark the top of your letter clearly with ‘repayment claim’ so that HMRC can make sure it gets to the right department.

To write to HMRC, use the address on GOV.UK.

See below for an idea of how to write your letter and what you might include. Generally, your letter should:

  • give your full personal details – your name, address and National Insurance number,
  • include as much information as possible about your pension or employment, for example, PAYE reference numbers, how much you were paid and how much tax was deducted,
  • enclose copies of P60s and P45s if you have them – keep the originals,
  • say why you think you are due a repayment,
  • say how you would like to receive any repayment,
  • be signed and dated in ink.

Keep a copy of your letter and any enclosures and ask the Post Office for a proof of posting in case of later query.

In most cases you can get back the tax you have overpaid, as long as you claim on time. Note, in some cases, you may be asked to complete a form R38 or you may want to enclose this with your letter if you would like your refund paid (mandated) to someone else.

Remember, even if you only want HMRC to look at one particular tax year, HMRC may take the opportunity to look over the four ‘open’ tax years. Therefore, you should review your position for all four tax years before contacting HMRC.

Claiming back emergency tax

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. This is because it is likely to result in HMRC issuing you with an emergency tax code. 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.

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.

Example: Emily

Emily starts a new job in September 2023. She lives in Wales, has not got a form P45, but has been working earlier in the year. She completes the starter checklist, and her new employer uses 1257L M1 as an emergency code.

So, each month under 1257L M1, Emily is allocated one-twelfth of her personal allowance.

September

She starts off in September with £1,048 of allowances (£12,570 divided by 12). She earns £2,000, so her tax liability is £190.40 (£952 at 20%).

October and November

In October and November, she gets another £1,048 of allowances in each month. Again she earns £2,000 each month, so her tax liability is £190.40 each month.

December

In December (which is month 9 of the tax year), 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 1257L.

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 2023/24 (£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 (£1,048 x 9 = £9,432). The difference is £1,068. Emily’s tax liability to date is therefore £1,068 x 20% = £213.60. Emily has paid tax of £500 plus £190.40 x 3 = £1,071.20. Emily will get a refund of £857.60 through the payroll in December.

January, February, March

As the wrinkle has been ironed out, going forwards, Emily will have £1,048 to set against her monthly income of £2,000, resulting again in tax liabilities of £190.40 each month.

At the end of the tax year, Emily’s total income will be £16,500. Her total tax paid will be around £785. If we set Emily’s personal allowance (£12,570) 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.

Claims for employment expenses

If you have spent your own money on things you need for your job, you might be able to claim tax relief, which might result in you receiving a tax refund.

Eligibility

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 pages Employment expenses, Employment expenses: travel and Employment expenses: using your own car.

Note that for employment expenses to qualify for tax relief, you must have incurred them wholly, exclusively and necessarily in the performance of the duties of the employment.

You should keep records and evidence of any such expenditure.

If your employer pays you back for your employment expenses (in other words, they reimburse you), you cannot claim tax relief.

Even if you meet the rules, you need to make sure you have paid enough tax to get tax relief. In 2023/24, you will pay tax on your earnings over £12,570 (your personal allowance).

Tax relief due

If you make a valid claim for tax relief, you will not receive the full amount of the expense back from HMRC – you will just receive tax relief on the amount at the rate of tax that you pay. For example, if you want to claim the standard allowance of £60 for washing your uniform at home and you pay tax at a rate of 20% in that tax year, you will receive tax relief of £12 (20% of £60).

How to claim

Note that you can claim tax relief going back up to four tax years.

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 through the Government Gateway
  • 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 an ‘employee number’ you should insert ‘unknown’ otherwise you will not be able to progress.
  • Details of the expenses you wish to claim for example 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 P87 form, you can find more information and also an annotated example of form P87 on the page Form P87: tax relief for employment expenses.

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 will take a fee from any repayment you get. If you are thinking of paying a tax refund company to help you make the claim, we strongly recommend you read our guidance.

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.

Receiving the refund

You would receive a tax refund cheque for any past tax years, and would get your tax code adjusted for the current and future years – the relief will be given automatically in your pay packets so you will not need to claim again (although you should make sure you check your PAYE coding notice carefully to ensure that the relief has been ‘coded in’ properly).

Be aware that HMRC usually process claims for tax relief on employment expenses on a ‘pay now, check later’ basis. This means that they may pay out a refund when they receive a claim, even if you are not entitled to it. However, HMRC have the right to check the accuracy of the claim and the amount of the refund at a later stage – so they may ask for the money back if the claim turns out to be incorrect.

Example: Josie

Josie earns £12,650 in 2023/24. After the personal allowance is deducted, she will have taxable income of £80, which at 20% means that she will pay £16 tax. She has qualifying expenses of £50 which she has paid for from her salary. By putting in a tax claim for this, she will not get the £50 back from HMRC, but will get the tax back that she has paid on the £50. As she has paid tax at 20%, this will be £10. Even though she will also have paid 12% National Insurance on the £50, there is no National Insurance relief available.

If Josie’s expenses were £200, her tax claim would be restricted to £80 and her refund restricted to £16.

Work changes

There are various different situations that could arise if your work situation changes at some point in the tax year, for example if you stop work, start work, or change jobs.

Stopping work and starting again

If you have stopped work part way through the tax year but then start working again, provided you are on a cumulative tax code (either because you are continuing with the same employer or you have a new employer but gave them your P45 from your old job) this will give you the benefit of any unused personal allowance from the period when you were not working. You could expect to get a refund of taxes paid earlier in the year, through the payroll or pay slightly less tax to begin with once you start work again, until the spare allowance is used up.

Stopping work and no other income

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 (including taxable benefit income), you should be able to claim an in-year tax repayment using form P50. This means your refund will be paid within the tax year, rather than having to wait until the end of the tax year.

You should not need to send in your form P45, however if the details on your form P50 do not match HMRC payroll records, then you may be asked to send it in – so keep it somewhere safe.

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 after that, 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.)

Once you have sent in a P50, 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 can also nominate someone else to receive the refund and it can be paid by post or directly into their bank or building society account.

Stopping work and claiming JSA or ESA

You cannot use form P50 if you are claiming, or intending to claim, a state benefit such as jobseeker’s allowance (JSA) or contributory/new style employment and support allowance (ESA). This is because some of these benefits are taxable and so will affect the amount of any refund that you can claim.

If you are starting to claim JSA or ESA after leaving your job, you need to give your form P45 to the DWP. They will then put the details from your earlier paid work onto their system. If you are due a tax refund from your paid work, you will not get this refunded until the earlier of:

  • ceasing to claim JSA or ESA – in which case your refund comes from Jobcentre Plus; or
  • the end of the tax year (for continuing claims).

If DWP do not issue your refund automatically, you may have to contact HMRC to claim it.

Leaving 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 in respect of your pre-departure employment income. This is because you will probably not have used all your personal allowance. You can claim this refund by completing form P85 ‘Leaving the UK – getting your tax right’ to HMRC. You can find the form on GOV.UK.

If you are leaving the UK temporarily, then see the guidance in our page Temporary work abroad.

Lost pay and tax documents

HMRC may ask you to provide various documents, for example a P60 or a P45, if you want to claim a refund of tax.

If you are an employee, at the end of the tax year, you should get a form P60, which is a record of how much you have been paid and the tax that has been deducted. Your employer must, by law, give you a form P60 no later than 31 May if you were working for them on 5 April.

When you leave a job, your employer must give you a form called a P45. It is a record of your pay and the tax that has been deducted in the tax year so far.

If you do not receive these documents, you should request them from your employer and keep them safe.

If you have been given these documents but you have lost them, then you should do the following:

  • For a P60, you should first approach your employer to ask them if they can provide you with a copy. Employers are obliged to keep records of pay for several years and so they should be able to provide you with a copy of your P60. The P60 will be clearly marked as ‘duplicate’.
  • For a P45, your employer will not be able to provide you with a duplicate but should be able to provide you with a ‘statement of earnings’ on company-headed paper. This acts as a replacement for a P45.

Alternatively, you can contact HMRC. HMRC will be able to provide you with alternative official information regarding the amount of pay that you received and tax that you paid, based on the amounts which the employer has reported to them. You can find contact details for HMRC on GOV.UK.

More information

The time limits for claiming back overpaid tax are set out on our page Tax refunds. This includes information on what to do if you miss the normal time limits for making a claim for repayment of tax.

There is a tool on GOV.UK that will help you work out how to claim a tax refund in various scenarios, including employment related scenarios.

For guidance on your tax refund position if you stop work because you are made redundant, see our guidance on redundancy.

For information on P800 refunds and tax refund companies see our page Tax refund companies.

For information on getting tax back if you have taken money from your pension flexibly, see our page How tax is collected on flexible pension payments.

We have produced some example letters you can use to write to HMRC regarding a tax repayment. These are available in the following formats:

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