tax hmrc income

12 Reasons Why You've Overpaid Tax

21 May 2026

3 min read

Reviewed by Head of Operations, Ryan Carman ATT

Reviewed by Ryan Carman ATT Ryan Carman ATT LinkedIn

Ryan is the Head of Operations at RIFT Group, where he’s been making an impact for over 12 years. Whether he’s refining processes, leading strategic initiatives or fostering a collaborative environ...

RIFT Roundup: The Essentials

Mixed-up jobs & tax codes: If you change jobs, get made redundant, or work two roles, HMRC can mix up your codes. Your £12,570 tax-free allowance then goes to the wrong job, and you get taxed from your very first penny.
Missed perks & reliefs: You lose free cash if you don't claim perks like the Marriage Allowance or the £7,500 Rent a Room relief. If you work for yourself, you also miss out if you don't use past losses to lower your current bills.
Unclaimed costs & fines: You lose money if you miss tax deadlines, which costs you a quick £100 fine. You also overpay if you don't claim tax back for your work travel, tools, and uniforms, or if you pay National Insurance past pension age.

🧾 Did you know? The Institute of Chartered Accountants in England and Wales found that in 2025 alone more than 730,000 PAYE refunds went unclaimed.

No one likes to pay tax. It's never fun to lose your hard-earned cash. It's even harder if you do all the paperwork yourself for a Self Assessment.

But even if you're on PAYE, you can still pay too much. Here are a few ways HMRC takes more than they should from your pay:

You Missed the Deadline

This is an easy trap to avoid, but many people are still leaving their taxes too late. Being late by just one day will cost you £100. That's a very costly slip-up.

If you delay your form or your payment for longer, the fines get much worse.

You're On the Wrong Tax Code

Just because you're on PAYE doesn't mean your tax code is right. Your boss might've made a simple mistake.

If you changed jobs or lost your job during the year, you might've paid too much tax already.

💡 RIFT Recommends: Check if you're on the right tax code to make sure you aren't overpaying.

You're Working Two Jobs and Not Using Your Full Personal Allowance

This happens a lot. If you have two jobs, your tax-free Personal Allowance usually goes to your main job.

If HMRC mixes up your main job with your side job, your top pay gets taxed from the very first penny. For example, say your side job pays £10,000 a year on top of your main role. If HMRC gets them the wrong way round, you could lose out on £1,000 a year from your tax-free perks.

You're Not Using Your Other Allowances

You have more perks than just your main personal one. You also have a Capital Gains Tax Allowance, Annual Investment Allowance and Marriage Allowance.

If you don't use them, you're giving the taxman cash that should stay in your pocket.

You're Not Claiming Your Expenses

If you work for yourself, you must track all the cash you spend on your trade.

If you work from home, you can claim tax relief on some of your bills.

Even if you're a PAYE employee, traveling to different work sites means you can get a claim for travel costs.

"The biggest mistake we see day in, day out is people assuming their employer covers everything. If you’re driving your own kit to different sites, depots, or bases, and you're shelling out for fuel or public transport out of your own pocket, HMRC owes you a break." - Bradley Post, RIFT Refunds CEO

If you're using your own vehicle to travel to temporary job sites or postings, you can claim tax back by mileage and vehicle type.

Vehicle type	Rate for first 10,000 miles	Rate after 10,000 miles
Cars and vans	45p per mile	25p per mile
Motorcycles	24p per mile	24p per mile
Bicycles	20p per mile	20p per mile

You're Treating Your Tax Years as One-and-Done

If you're self-employed, keep in mind that you can move last year's losses forward. This helps lower the tax you pay on this year's profits.

Your Payments on Account Are Too High

If you know you'll earn less cash next year, you can ask HMRC to lower your advance tax payments.

💡 RIFT Recommends: Don't wait until January to slash your payments on account; you can log into your online tax account right now to lower them and keep that cash in your business pocket today.

You Didn't Hear About "Rent a Room Relief"

If you rent out a spare room in your house, there's an easy scheme you should use.

This perk lets you take in £7,500 in rent each year totally tax-free (although this does drop to £3,750 if you have joint ownership, such as with a partner).

Don't miss out on this. If you rent out houses as a landlord, don't forget to claim for your costs and your mortgage fees.

You're Not Getting the Best Out of Your Savings

Try to use your full tax-free ISA limit if you can.

If your wife or husband pays a lower tax rate than you, you can move savings or shares to them to pay less tax.

You're Paying National Insurance Too Long

Once you reach state pension age, you can stop. You don't have to pay National Insurance anymore.

You're Not Using Your Pension Properly

When you put cash into a workplace pension, remember that the money can come out of your pay before you're taxed. It's called a tax free pension allowance.

You're Not Getting the Right Help

HMRC doesn't actually want to take more cash than you owe. But you have to stay sharp so you don't pay too much. A four year backdated travel expense claim alone leaves big money on the table.

Claim period	Average payout amount	Who qualifies?
1 Year Claim	Around £800	PAYE employees travelling to temporary sites.
4 Year Claim (Maximum)	£3,000+	Any eligible worker who has never claimed before.

If you've overpaid, you can get a tax rebate if you can prove it. At RIFT, we know how to deal with HMRC. We've been helping people get cash back and file tax returns since 1999. We know our stuff.