With the cost of living rising, people up and down the country are looking for ways to keep costs down, from turning the radiators off to cancelling streaming subscriptions.
But tax refund experts, RIFT Tax Refunds, are spreading the word that there might be a way of saving money without sacrificing comfort or lifestyle: tax refunds.
Paying is supposed to be simple, and for most people, it’s all done automatically through the Pay As You Earn (PAYE) scheme, although those with self-employed status have to submit a self-assessment form each year for HMRC crunch the numbers and figure out what they owe.
Even if you’re on PAYE, HMRC’s calculations aren’t always accurate, and you can end up paying more tax than you owe. But what is a tax refund, and why might you be owed one? Here’s a quick run-down of the main things you need to know.
Incorrect tax code
To calculate how much tax a person owes, HMRC assigned everyone their tax code. However, tax codes change over time and don’t always keep up with your situation.
This can result in you overpaying tax. Your tax code will be on any letters you’ve had from HMRC, and if you notice it has changed, do not ignore it! Get in touch with HMRC and ask why it has changed and whether you are still paying the correct amount of tax. HMRC aren’t in the business of cheating, so if they’ve made a mistake, they will happily reimburse you.
The taxman can get confused when you move from one job to another or from PAYE to being self-employed. While HMRC will always try to follow what you’re doing and tax you correctly, they can only do so if they have all the required information.
If you suspect you’re overpaying tax due to a job change, you can contact HMRC and double-check the details they have for you. Alternatively, you can hire a tax refund speciality to handle it all for you.
Pensions and taxes have a tricky relationship. While there are good measures to ensure you don’t overpay, there are many intricate rules and caveats that can complicate things without you noticing. It’s worth talking to someone who knows the tax rules inside-out to ensure you’re not losing out.
An annuity is a financial product that pays out a fixed stream of payments, primarily used as an income stream for retirees. If your annual income is below your allowance, you should not be taxed, but sometimes you still are.
Redundancy payments are taxable, but overpayments are quite common. If you think you’ve overpaid, call HMRC, and they will double-check for you and, if appropriate, send you a quick refund.
This might be the most common reason for tax refunds because many people filling in self-assessment forms are not financial experts. This makes it all too easy to over or underpays income tax.
HMRC usually catch the mistake quickly and sends an automatic refund. If not, you can call and request one. To avoid complications, you can get an expert to fill in your self-assessment.
Savings interest and PPI
You’re allowed to earn a certain amount of interest on your savings without paying tax. The threshold depends on your income. If think you’ve been taxed too much or too early, you might be owed a refund.
Income from abroad and earnings while overseas
If you’re a UK citizen but earn some of your income overseas, it complicates tax matters. You might even end up paying tax here and abroad on the same income. It’s best to speak to a tax pro to ensure you’re not overpaying.
It’s well-known that self-employed people can claim money back for their business expenses, from travel to phone bills. But PAYE workers can claim for costs, too. You need to make sure you’re keeping a record of expenses and have proof that they’re related to your work.
It’s important to note that even if your employer already contributes towards your business mileage or travel expenses, if it’s less than the total AMAP rates, you are still entitled to claim the difference back as a mileage tax rebate.
Are you eligible for a tax refund?
As you can see, there are many reasons you might be owed a tax refund, but it’s not always easy to figure it out on your own. You can complete a simple questionnaire to determine if you’re eligible here. It takes a few minutes and is completely free.
CEO of RIFT Tax Refunds, Bradley Post, commented: ‘HMRC has a lot of taxpayers to keep track of and while they’re not in the business of deliberately charging, mistakes are part and parcel of life. However, the complex rules to make sure everyone contributes an appropriate amount to the economy can make it hard to know whether or not you’re paying the right amount.’
With the cost of living rising so dramatically, it’s more important than ever to double-check that you‘re not paying more than you rightfully should. While certain professions or aspects of working life are more likely to be due for a refund, you never know how much you might be owed. Especially given the fact you back legally backtrack a claim for up to four financial years.’