Claiming refunds of overpaid paye
Have you been paying too much PAYE tax? You’re certainly not alone. Each year, thousands of UK employees and company directors unknowingly overpay their income tax, missing out on refunds that rightfully belong to them. The good news is that HMRC has a straightforward process for reclaiming this money, and understanding how it works could put cash back in your pocket.
Why PAYE Overpayments Happen
PAYE overpayments occur more often than many people realise. Common reasons include receiving a payrise mid-year without your tax code being updated promptly, changing jobs and having your Personal Allowance allocated to multiple employers, or simply working fewer hours than your employer anticipated at the start of the tax year.
For the 2024/25 tax year, the Personal Allowance remains at £12,570 for those under 65. If you’re entitled to claim relief on professional fees, uniform costs, or working-from-home expenses, and these haven’t been factored into your PAYE calculation, you may also be overpaying. Company directors and those taking irregular bonuses are particularly vulnerable to overpayments, as their income can fluctuate significantly.
Another common scenario is when you’ve had two or more jobs simultaneously, or moved between jobs without your tax code being adjusted in time. Each employer typically operates on a cumulative basis, but mistakes do happen.
How to Check if You’ve Overpaid
The simplest way to establish whether you’ve overpaid is to log into your Personal Tax Account on the HMRC website. This free service shows your tax code, your income record, and crucially, your tax liability for the current and previous tax years. Most people can access this within minutes.
Alternatively, you can contact HMRC directly by calling the Income Tax helpline on 0300 200 3300. They’ll review your records and confirm whether a refund is due.
If you’ve recently finished a tax year and received a P60 from your employer, cross-check the total tax shown against your actual liability. Your accountant or tax advisor can help with this calculation if the figures don’t look right.
Making a Claim Through Self-Assessment
If you’re already completing a Self-Assessment tax return, claiming an overpayment refund is straightforward. Simply ensure your return accurately reflects all your income, allowances, and reliefs. HMRC will automatically calculate any overpayment and offer you a refund when they process your return.
However, if you’re not required to file a Self-Assessment return – most employees aren’t – you’ll need to contact HMRC directly. You can submit a claim using their online services, by post, or by telephone. When you contact them, have the following information ready:
- Your National Insurance number
- Your tax code(s) for the relevant year
- Details of any additional income or allowances
- Dates of employment changes or role changes
HMRC typically processes refunds within four to six weeks, though this can vary during busy periods such as after the January 31st Self-Assessment deadline.
Time Limits for Claiming Back Overpaid Tax
It’s important to know that there are time limits for claiming refunds. Generally, you can claim back overpaid tax for the current tax year and the previous four tax years. This means claims for the 2023/24 tax year can still be made until April 5th, 2029, but older claims may fall outside the window.
If HMRC has made an error – for instance, failing to apply your Personal Allowance correctly – they may be able to go back further, but it’s wise not to rely on this. The sooner you claim, the sooner you’ll receive your money.
Taking Action
Don’t assume that your employer or HMRC will automatically spot and correct overpayments. Whilst HMRC’s systems are sophisticated, they’re not infallible, and employers can only work with the information provided to them. Taking a few minutes to review your tax position each year is a worthwhile investment.
If your circumstances are complex – for example, you’ve been self-employed and employed simultaneously, or you’ve had significant changes in income – it’s worth getting professional advice to ensure you’re claiming everything you’re entitled to.
For tailored advice, contact Severn Accounting — we’re here to help.