Ever wondered if you could be due some tax back from HMRC? In this first instalment of a two-part article we explore 3 easy “tell-tale” signs that you, too, could qualify for a tax rebate… Although not every taxpayer is entitled to claim a tax rebate, everyone should at least check!
With the start of the new tax year beginning on 6th of April, now is the ideal time to claim any tax rebate that you may be entitled for the last 4 tax years.
HMRC is making it easier nowadays for tax payers to claim back any income tax they may have overpaid in the last 4 tax years. Provided you know the rules and are comfortable with completing all relevant forms online, you should be able to claim a tax rebate by yourself. However, some cases could prove quite complex and you may require help from a registered tax professional (read our article for advice on how to choose a reputable tax agent).
3 of the 6 "Tell-Tale" Signs That You Could Be Due A Tax Rebate (part 1)
1. You frequently went in and out of employment in the last 4 tax years
The job market is precarious, long gone are the days of “one job for life”. An increasing number of jobseekers have no other option but to rely on temporary agency or short-term contracts, alternating short spells of employment with periods of claiming Jobseekers Allowance (JSA) or Employment Support Allowance (ESA).
Unless you provided each new employer your P45 from your previous job (or the P45U from the Jobcentre if you were claiming employment benefit), the chances are HMRC may have put you on the wrong tax code at some point, resulting in your paying too much income tax.
For example, they may not exactly know how much Jobseekers Allowance (JSA) or Employment Support Allowance (ESA) you may have received in a particular year. 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 could have automatically applied an 'emergency tax code' against your earnings, which means you could be charged 20% income tax on every pound you earn from that point on, ouch!
Generally, HMRC would spot the anomaly, apply the correct tax code and issue an automatic 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 unless you do something about it.
2. You are employed and use your own vehicle as part of your work duties
Especially concerned professions include community-based health professionals, like carers, nurses, midwives & locum doctors; construction site managers (who visit multiple building sites); sales professionals (reps; area managers; some estate agents), to only name a few.
By the way, we don’t mean using your own vehicle for commuting purposes (going to and from a single regular workplace, like a shop, office or factory) – normal commuting is not a claimable expense under HMRC’s guidelines.
Many workers are expected to use their own car (or motorcycle) to visit clients, patients, go to meetings, or visit multiple sites, with little or no reimbursement from their employer. As it stands, employers do not have to reimburse their staff for the use of their personal vehicle for work purposes. In some cases, they may provide staff with a company car but do not pay towards mileage.
Regardless, if you’re employed and your employer does not refund you 45 pence per mile (which is HMRC’s maximum mileage rate for employees’ mileage using their own car to perform work duties), you are legally entitled to claim back mileage costs from HMRC, as well as any congestion, toll or parking charges you may have incurred within the course of performing your own work duties.
3. You are an employed mechanic or auto technician and you purchase your own work tools
Motor mechanics, MOT testers & auto technicians (and even apprentices) are usually expected to provide their own hand tools and tool box at work, with no reimbursement from their employer. Buying tools can cost several hundreds of pounds over the course of a year, which could equate to several thousands of pounds in the last 4 tax years!
A good start to claim a tax rebate for your work tools is to ask your tool dealership or rep to print off your purchase history. This will help you break down the expenses in question per tax year.
If the expenses for your tool purchases are less than £2,500 per tax year, simply complete an online P87 form for each relevant tax year. If your tool expenses total £2,500 or over in any tax year, in that case you would need to claim tax relief by completing a tax return via self assessment (you may need to enrol the services of a tax agent to help you complete a tax return on your behalf).
Read part 2 of this article next week when we explore the last 3 “tell-tale” signs that you may be due a tax rebate.
Think one or a combination of these "tell-tale" signs of a possible tax rebate apply to you? Don’t let the Taxman keep your hard-earned cash! Download a free tax rebate application pack and one of our specialist consultants will get in touch to discuss your case in all confidentiality and at no obligation to use our services.