Income Tax Rebates

The HMRC tax rebate rules aren't always easy to get your head around.  In fact, a lot of people pay too much year after year, simply because they don't know they're owed a tax rebate.  Do you travel for your job or have essential work costs from your own pocket?  If so, you may be due a tax rebate. 

To claim your tax rebate, you need to be able to prove that the taxman owed you money.  The best way to do this is to keep good records of everything you're spending to do your job.  If you're travelling, keep track of your mileage and any accommodation or food costs you're running up.

HMRC Tax Rebate

Am I due a tax rebate?

A tax rebate or tax refund means that if you've paid too much tax to HMRC you are entitled to claim it back.

By law, if you're travelling to temporary workplaces and paying to make your own way there, you could be owed a tax rebate.  On average, a 4-year tax rebate claimed through RIFT amounts to £2,500.

Often, overpaid tax comes from things like not being reimbursed for the costs of travel or work-related expenses by your employer.  Without making a claim HMRC won't know to send it to you. It's a clunky system but we're here to help.

Even if you're getting reimbursed for some of them by your employer, you may still be tax back. The best thing to do is get in touch with RIFT. We're the experts in tax refunds and all our clients are protected by our unique RIFT Guarantee. This means that you'll always stay on the right side of HMRC, and your tax rebate is completely safe.

Our tax rebate calculator is the best way to find out how much you're owed.  It takes less than a minute to complete and gives you an instant estimate of how much your tax rebate could be worth.

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HMRC Income Tax Rebates

What is income tax?

Simply put, Income Tax is a bite that the government takes out of your pay. People employed on a Pay As You Earn (PAYE) basis have Income Tax taken out before they get their money. Others, such as the self-employed, pay their Income Tax directly by filing a Self Assessment tax return.

HMRC Income Tax Rebates

What's a personal allowance?

Your Personal Allowance is the amount of money you can make without paying any Income Tax on it. This tax-free allowance is determined by your tax code. For example, if you have the standard tax code of 1100L, you can earn £11,000 per year before you start to pay any tax.

Rate of income tax

What rate of income tax do I pay?

When you start to earn more than your tax-free Personal Allowance, you move into the basic rate tax band. Any money over your allowance is taxed at a rate of 20%. This basic tax rate comes out of all your income until you hit the threshold for the higher rate band. With each band, the rate of tax you're paying goes up.

There are a couple of important things to remember about tax rates and bands. Firstly, they tend to change every so often, when a new government budget is announced. Also, you only get taxed in each band for the money you're earning over its threshold.

Band Taxable Income Tax Rate
Personal allowance Up to £12,570 0%
Basic rate £12,571 to £50,270 20%
Higher rate £50,271 to £150,000 40%
Additional rate Over £150,000 45%

HMRC Income Rates

How do I pay income tax?

If your employer pays you through the PAYE system, your money is taxed automatically. You'll get a P60 form after the end of the tax year to show how much you paid. Your payslips should also show the tax taken from each payment.

If you're self-employed or have other sources of income, you'll have to register for Self Assessment tax returns. Every year, you'll fill in a form to tell HMRC how much you've earned so they can work out the tax you owe. You may also be able to claim tax relief on your business expenses to bring down your overall tax bill.

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Income tax rebates

Have I paid too much income tax?

Whether you're employed PAYE or work for yourself, it's possible to pay too much Income Tax. For example, if you're paying for travel to temporary workplaces you may be owed a refund from HMRC.

There are actually a lot of work-related costs that you can claim tax back on, and a lot of people are missing out. The rules are tricky to get your head around, but RIFT can show you the ropes. To get you started, here’s our simple tax rebate calculator to work out how much you're owed.

Tax Calculator

Claim tax back

How do I claim back tax I've overpaid through PAYE?

The form you need to claim back overpaid PAYE tax is called a P87. You can fill this in online at the gov.uk website. The main thing to realise about claiming a tax refund for work travel and other expenses is that HMRC will need to see proof of everything you’re claiming for. That means tracking your business mileage throughout the year and keeping records of the allowable expenses you’ve paid out. We’re talking about things like:

  • Food and accommodation bills when you’re travelling to temporary workplaces.
  • Repair and replacement of any necessary tools, equipment or uniforms.
  • Professional subscriptions or fees that are needed for your work.

The other thing to know is that things change if you’re claiming a refund for over £2,500 of essential expenses. In that case, you’ll also need to register for the Self Assessment system and file a tax return to get back what you’re owed. You’ll also need to use a separate P87 for each job you’re claiming a tax refund for.

The tax refund system can be complicated if you’re not an expert. It’s all too easy to end up missing out or tripping over the rules. Talk to RIFT to make sure you always get back everything you’re owed.

Pensions & Tax

Why might I pay too much income tax on my pension?

There are a few reasons why you might be overtaxed on your pension. For example, it’s possible that you’re on the wrong tax code. Tax codes change over time, and they don’t always keep pace with your changing circumstances. That’s why it’s so important to check yours regularly – and to ask questions if you think it’s wrong.

Another time you might end up paying more tax than you should on your pension is when you first start drawing some taxable income from it. This can happen if you don’t have a P45 to show your provider. If they don’t yet have confirmation from HMRC of your proper tax code, you could well find yourself paying “emergency tax”. Depending on your situation, you’ll generally need a P50Z, P53Z or P55 form to get your cash back. As always, talk to RIFT if you’re confused about how to get your refund.

Tax refund limits

Are there limits on claiming back overpaid tax?

You can claim back overpaid tax for up to 4 tax years. This means it might not be too late to get back what you’re owed, even if you’ve never made a tax refund claim before. However, once those 4 years are up, any unclaimed refunds you could have claimed are gone forever.

Are tax refunds automatic

If I do nothing, will HMRC automatically refund my overpaid tax?

If HMRC already has all the information it needs to notice that you’re owed a tax refund, you might receive a P800 tax calculation to tell you about it. Of course, getting a P800 can also mean that HMRC thinks you haven’t paid enough. Either way, if you get one, never ignore it.

If your P800 says you’re owed a refund, you can hop online and claim it back at the gov.uk website. This is generally the fastest way to get your money. If you don’t do it within 45 days though, HMRC will just send you a cheque – which should arrive within 60 days of the date on your P800.

There’s a big problem with doing nothing and expecting HMRC to repay what you’re owed, though. Basically, there are a lot of situations where they simply won’t know that you’ve overpaid your tax. For instance, if you’ve got work expenses to claim tax relief for, HMRC won’t automatically know how much mileage you’ve done or how much money you’ve spent. That’s why you need to make an actual tax refund claim with form P87 – and why you need to keep good records of what it’s costing you to do your job.

RIFT Guarantee

Our guarantee means you'll never lose a penny

When you claim your tax rebate with RIFT, our unique RIFT Guarantee means that you don't have to worry about the taxman reclaiming any of your money.  So long as you give us full and accurate information, if HMRC disagrees with the amount that we've claimed and ask for the money back, we'll pay it.  It won't cost you a penny.

RIFT Guarantee

Need more help?

Wondering if you can claim a tax refund or need to submit a tax return? Use our online tools to find out if you're owed money by HMRC.

Do I Qualify?

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