There are a variety of reasons why you could be due a tax refund, here we explain some of the most common.
If you frequently changed employers since April 2009, or if you frequently changed addresses, then you could have been put on the wrong tax code at some point, resulting in your paying too much income tax. This is because HMRC may be unclear about your tax liability in a particular tax year.
For example, they may not exactly know how much Jobseekers Allowance (JSA) or Employment Support Allowance (ESA) you may have received in the past, especially if you frequently went in and out of employment. Maybe you failed to provide your new employer with the P45 from your previous employer (or from the Jobcentre if you were claiming JSA); maybe you never received your P45 because you changed addresses and didn't tell your employer or HMRC about it. One or a combination of these factors could contribute to HMRC being unclear about your overall tax liability... As a result, they would automatically apply an 'emergency tax code' against your earnings, which means you would be charged 20% income tax on every pound you earn from that point on, ouch!
Generally, HMRC would spot the mistake and start applying the correct tax code, issuing a tax refund directly through your wages within a matter of weeks. But sometimes the situation doesn't get resolved automatically and the tax you overpaid could remain in the taxman's pocket. As a specialist tax agent, TaxRefundPro understand what information HMRC will need to unblock the situation. If it turns out you paid more income tax than you should have, then you would receive a refund.
You may also be entitled to a tax rebate if you worked and left the UK permanently (not for a holiday) within any of the last 4 tax years. Maybe you are a foreign national and you decided to return to your home country; maybe you are a UK citizen who emigrated or had to relocate overseas. Maybe you even returned to live in the UK at a later date. You would usually be due a refund because you probably wouldn't have used all of your personal allowance within the tax year during which you left the UK. The personal allowance is a set amount that everyone in the UK is allowed to earn tax free, regardless of their nationality. It is divided in twelve equal amounts throughout the whole year so that each month you are only taxed on any income earned above that amount. The rate of personal allowance tends to change every year. For example, it is £9,440 for this current tax year but it was £8,105 for 2012/13. If you only worked part of a tax year in any of the last 4 years and actually paid tax, then you might very well be due some of it back! Similarly, you could qualify for a tax refund if in future you decide to leave the UK permanently.
If you are a CIS worker (Construction Industry Scheme) then you are taxed at source at a rate of 20%. This means that you don't automatically receive any of your personal allowance, which is the reason why CIS workers typically get some of the largest tax rebates. Additionally, you should be taxed on your profit, not your gross income, which means that you could also obtain tax relief on your work related expenses. By doing so, your overall tax liability would be reduced even further, thus increasing the value of your tax refund.
You could also be due a tax refund if you are employed and incurred work-related expenses, for which your employer did not reimburse you at all, or in full. Please note that such work expenses must be necessary for you to perform your occupation and you must pay for these yourself. Typical work-related expenses can include tools, safety clothing, fuel and travel expenses or the purchase of IT equipment needed to carry out your normal occupation. Many mechanics, carers, teachers, construction workers, etc. are affected. It is however a specialist area that can be quite complex so it's best if you enlist the help of an experienced tax agent like ourselves to help you with your claim.
If you think any of these examples apply to you then call our tax consultants now for free advice or fill in our application form for a free tax rebate application pack