Claim a refund if you have overpaid tax

Many people don’t realise they may have overpaid their tax to HMRC during the year. Whether you’re an employee, self-employed, or a business owner, overpayment happens more often than you’d think—and the good news is that the money is rightfully yours to reclaim. If you suspect you’ve paid more tax than you should have, here’s what you need to know about claiming a refund.

How tax overpayment happens

Tax overpayment can occur for several reasons. Employees might have multiple jobs where their tax codes weren’t adjusted properly, meaning too much tax was deducted at source through PAYE. Self-employed individuals sometimes pay more in Class 2 or Class 4 National Insurance contributions than necessary if their profits fall below certain thresholds. Business owners might claim expenses incorrectly or miss out on available reliefs like Capital Allowances or Trading Allowance.

Changes in circumstances during the tax year—such as leaving employment early, receiving less income than expected, or significant life changes—can also result in overpayment. The key is identifying whether you’ve actually paid more than your tax liability for the year.

Checking your tax position

The first step is to understand what you actually owe. HMRC provides several tools and statements that show your tax record. If you’re employed, check your P60 (issued each April) and P45 if you’ve left employment. These documents detail how much tax you’ve paid via PAYE during the tax year.

For self-employed individuals, your Self Assessment tax return will show your profit, your tax liability, and any payments you’ve made. Compare what you’ve paid (including payments on account) against what you actually owe. If you’ve made overpayments through estimated payments, you’re entitled to reclaim them.

You can also check your HMRC online account if you’re registered for Self Assessment. This gives you real-time visibility of your tax position and any balances owed or due back to you. If you’re unsure about your calculations, this is where professional advice becomes invaluable—an error here could cost you.

Making a claim for repayment

If you’ve confirmed an overpayment, the process of claiming it back depends on your circumstances. For employees, the simplest approach is often to contact HMRC directly. If the overpayment resulted from an incorrect tax code, HMRC will usually refund it automatically once they’ve corrected your records. You can report this through your HMRC online account or by telephone.

For self-employed individuals, any overpayment shown on your Self Assessment account will be carried forward against next year’s bill, unless you specifically request a refund. You can claim repayment through your online account under “View your refunds” or by contacting HMRC directly. Be aware that HMRC may take several weeks to process the claim.

The timeframe matters. You can generally claim back overpaid tax going back four years from the end of the tax year in which the overpayment occurred. For the 2023/24 tax year, for example, you’d need to claim by 5 April 2028. However, it’s best to claim as soon as possible—there’s no advantage to waiting, and HMRC won’t pay interest on refunds.

Common reasons for overpayment to watch

Employees in their first year of work often overpay if their tax code hasn’t been updated. Self-employed traders with profits below £1,000 can claim the Trading Allowance, which many miss. Those with significant charitable donations or pension contributions may not have claimed full relief. Business owners sometimes overlook legitimate expenses or Capital Allowances on equipment purchases.

If you’ve been affected by the National Living Wage or other employment changes, your tax code might need review. Similarly, if you’ve become a carer or claimed other personal allowances you weren’t previously eligible for, an overpayment is likely.

Getting professional help

Whilst many straightforward overpayments can be claimed directly with HMRC, more complex situations benefit from professional guidance. If your tax affairs are intertwined with multiple income sources, business ownership, or investment income, it’s easy to miss legitimate claims that reduce your tax bill.

At Severn Accounting, we regularly identify overpayments our clients didn’t know they’d made. We review your tax position thoroughly and ensure every available relief and allowance is claimed, potentially saving you hundreds of pounds.

Don’t assume your tax is correct just because HMRC hasn’t chased you. If you have grounds to believe you’ve overpaid, it’s worth investigating. Your money is waiting to be reclaimed.

For tailored advice, contact Severn Accounting — we’re here to help.