In the tax year 2018/19 around 460,000 requests were made to HMRC for refunds on overpaid income tax, according to an FOI request by the insurance company Royal London.
The repayment values totalling £5.1billion made to individuals, made up of refunds made to individuals and for personal pension contributions and although individual taxpayers were refunded £2.78 billion this figure was lower than the 2017/18 year’s £3.1 billion total. Pension refunds increased by 10% to £2.24billion.
The main reasons for income tax to be over charged were due to an individual changing jobs or a change to taxable benefits.
“Always check your tax statement for the year and to keep note of any unusual changes to your income that might mean you have overpaid”.
Becky from the Royal London
Another reason for refunds to be requested could be tax paid on interest received as part of a Payment protection insurance compensation payout, PPI payments made include annual interest of 8% to compensate claimants for the years they were out of pocket due to being mis-sold a PPI policy.
For those who received interest within their personal allowance for the year and non-taxpayers may be eligible to reclaim tax paid on PPI interest if they have received a payout.
Circumstances where taxpayers may be able to apply for a refund of overpaid tax include:
- pay from your current or previous job
- pension payments
- income from a life or pension annuity
- a redundancy payment
- a self-assessment tax return
- interest from savings or PPI
- UK income if you live abroad
Individuals who believe they have overpaid income tax on savings or investments should complete a R40 form. Refund claims can be for up to four previous tax years.