Your 2020/21 Tax Refund: What Changed and What Didn’t
18th March 2021
Let’s get this straight from the start. 2020 was not a fun year for most of us in the UK – but nothing about it should mean missing out on your tax refund. As long as you’re spending your own cash on the essential costs of your work, you should be claiming back every penny HMRC owes you. A lot of things changed last year, but RIFT Tax Refunds is still here to make sure you get what’s yours by law.
Now, let’s get into the details step-by-step:
I had very different expenses and work conditions in 2020, can I still claim?
COVID-19 has changed a lot about our day-to-day work and travel arrangements. You might not be able to share transportation, tools, accommodation or workspaces like you used to, for example.
Depending on the kind of work you do, you might have seen your expenses change quite a lot in 2020. Don’t get put off by the fact that the numbers are shifting. If your income has dropped over the pandemic, for instance, that’s even more reason to be sure you’re not losing out to HMRC.
Can I claim a tax refund if my employment status changed?
Even if you’ve been made redundant during the pandemic, that won’t prevent you from getting your tax refund. Not only that, but you’ll probably be owed some additional tax back from HMRC. When you pay your tax through the PAYE system, your payments are based on the assumption that you’re earning steadily all year. When your income drops because of a redundancy, the tax you’ve already paid will probably have been too high. The same is true if your employer goes under or you take a sudden pay cut.
Maybe you’ve changed employers, or even made the switch between self-employment and working on the books. Again, none of that will stop RIFT from getting back the tax you’re owed. When you go into business for yourself, for instance, anything the taxman owes you from your PAYE days is still yours to claim. Meanwhile, if you’re self-employed in construction, there’s tax being taken from your pay by contractors now. That means you could qualify to claim for that via your Self Assessment tax return.
Whatever your situation, you’ll still need records to back up your claim, but RIFT is always there for you. We can chase up former employers and track down the essential details for your refund claim, then deal directly with the taxman on your behalf.
Will Furlough or SEISS mean I can't claim a tax refund this year?
Even if you’ve been on furlough for part of the year, you can still claim for travel and work expenses in the months you were working. The fact that you’re now on furlough doesn’t disqualify you for a single penny of the refunds you’re already owed, either. The money you’re claiming back now comes from the work related travel and expenses you had in the previous tax year. If you haven’t made a claim in a while, you could still be owed tax rebates dating back as far as 4 tax years. Nothing about the current situation should keep you from getting back what’s yours from those years.
Another thing to bear in mind is that a change in income while on furlough could have affected your tax code. As always, RIFT will be able to sort that out for you with HMRC and make sure it’s all correct.
With the Self Employment Income Support Scheme (SEISS), the grants you get count toward the profits you’re being taxed on. When we handle your Self Assessment tax return for you, we’ll make sure that all the paperwork’s done properly.
Are there any special rules about Self Assessment Tax Returns and the pandemic?
Remember, even if your self-employment income’s dropped during the pandemic, you’ll still have to file your Self Assessment paperwork. That’s true whether or not you end up owing any tax at all. If HMRC’s expecting a tax return from you, you’ll be piling up trouble for yourself if you keep them waiting. This is particularly important for people working via the Construction Industry Scheme. Any money you’ve earned via CIS will still have been taxed at 20% before you got it. That means that, even if you’ve earned too little over the year to pay tax, you’ve still lost money to HMRC and need to claim it back.
Of course, it’s not just the self-employed who need to file tax returns. Even if you’re on the books, if you’re claiming a tax refund for over £2,500 of expenses for the year, HMRC will need to see a tax return to process your claim.
Can I claim for working from home?
There are a few more things you really do need to keep in mind this year. For example, if you’ve been working from your own home in the last year, you’re probably owed some extra tax back. When you’re on the books, you can claim tax relief based on expenses of:
- £6 a week without any extra records or bookkeeping involved.
- Your actual costs, if they’re higher. You’ll need to keep records for this.
When RIFT handles your tax refund paperwork, we’ll always make sure your Work from Home allowance is taken into account.
Tax refunds for PPI payouts
Payment Protection Insurance policies were supposed to be a way of making sure you didn’t get in trouble paying off things like loans, credit cards and mortgages. The trouble was, companies were ramming them down customers’ throats whether they needed them or not. That led to a lot of people getting PPI refunds.
Here’s where it gets fiddly. While your PPI refunds aren’t supposed to be taxed, the actual pay-out you get has some interest included. Most people in the UK can earn £1,000 a year in interest without paying any tax on it. However, most of those PPI payouts have still been getting taxed at the Basic Rate of 20%. That means you could still be owed money.
This gets complicated fast – but the bottom line is that RIFT can get back any extra tax you’re owed through the PPI system when we handle your main tax refund paperwork. Just let us know that you’ve had a PPI pay-out in the last 4 years and we’ll make sure you get what you’re due.
The gift of RIFT
Throughout all the changes 2020 brought to people’s lives and work, one thing has stayed solid as a rock. RIFT is still the UK’s leading expert in tax and refunds. We’ve got the expertise and experience to make sure you never miss out, and your free RIFT app and MyRIFT account mean it’s never been easier to get us the information we need for your claim.
Am I due a tax refund?
If you haven't made a tax refund claim before then it only takes a few seconds to find out for free if you're owed any money back for the last 4 years. 1 in 3 British workers are, and the average refund is around £2,500 - £3,000.
Stay safe in 2021, and talk to RIFT about your yearly tax refunds.