How to claim a tax refund | Severn Accounting

Tax refunds aren’t always top of mind, but if you’ve overpaid HMRC, you’re entitled to claim that money back. Whether you’re employed, self-employed, or running a limited company, understanding how to reclaim overpaid tax can put extra cash back in your pocket. Here at Severn Accounting, we help businesses and individuals across Worcester and beyond navigate the tax system efficiently.

Who can claim a tax refund?

The most common scenario is employees who’ve overpaid income tax through PAYE. This happens when you leave a job partway through the tax year, have multiple employers simultaneously, or exceed your Personal Allowance despite tax being deducted. For the 2024/25 tax year, the Personal Allowance is £12,570—anything below this threshold shouldn’t be taxed.

Self-employed individuals and company directors can also claim refunds. If your tax bill turns out lower than expected when you file your Self Assessment tax return, you may be due money back. Limited companies sometimes overpay Corporation Tax (currently 25% on profits over £250,000) and can reclaim the difference.

How to claim through Self Assessment

If you’re self-employed or a sole trader, the simplest route is your Self Assessment tax return. When you submit your return online via HMRC’s digital service, the system automatically calculates whether you owe tax or are due a refund. If you’re owed money, HMRC typically processes this within 30 days of your return deadline (usually 31 January following the tax year end).

You must register for Self Assessment if you’re self-employed, have untaxed income, or earn over £1,000 from other sources. Once registered, you’ll receive a Unique Taxpayer Reference (UTR) and can file your return through your personal tax account on the HMRC website.

Claiming as an employee through PAYE

Employees who’ve overpaid tax can claim through their personal tax account without waiting for a Self Assessment return. Log into your HMRC digital account and check your tax code—this is often where overpayment issues appear.

If you’ve left employment and suspect overpayment, request a P45 form from your former employer. This document shows your earnings and tax paid to date. You can then claim a refund directly from HMRC using form P50, though the online portal is quicker. Simply log in, provide details of your employment, and HMRC will calculate any refund owed.

The process is straightforward if you have only one employer, but multiple employers complicate matters. If you’ve had two or more jobs in a tax year, ensure each employer knows you’re working elsewhere—they should adjust your tax code to spread your allowance properly. If they don’t, you’ll likely overpay and need to claim back later.

Limited companies and Corporation Tax refunds

Director-owned limited companies occasionally overpay Corporation Tax if profits are lower than anticipated or if they’ve made losses they’ve offset incorrectly. You can claim a refund by amending your Company Tax Return through the HMRC portal (usually within 12 months of filing, though there are limited circumstances for longer). Alternatively, you can carry losses backward or forward against future profits—this often makes more sense strategically than claiming a refund.

If your company has paid Corporation Tax but subsequently qualifies for R&D Tax Relief or other allowances, you may be entitled to an additional refund or credit. These claims must be made within four years of the accounting period end.

What documentation you’ll need

Gather relevant paperwork before claiming:

P45 or P60 forms (showing tax paid)
Payslips from all employment
Self Assessment tax returns (if applicable)
Business accounts and supporting records
Correspondence from HMRC

Timescales and next steps

HMRC typically processes refunds within 30 days once your claim is accepted, though complex cases may take longer. You can track progress through your personal tax account. Refunds are paid directly to your bank account—HMRC won’t send cheques anymore.

If you haven’t received your refund within the expected timeframe, contact HMRC or speak to your accountant.

Claiming tax refunds needn’t be complicated, but getting it right matters. If you’re unsure whether you’ve overpaid or how to submit a claim, professional guidance saves time and reduces the risk of errors.

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