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LITRG explain how you might have paid too much tax on employment income or pensions and how to go about claiming a refund.

‘PAYE’ taxpayers – isn’t there a form to claim back tax?

Confusingly, if you are not in the Self Assessment system, there is no form on which to claim a repayment if you have paid too much tax on your wages or pension. If you are, however, reclaiming tax on savings income you can use form R40.

How might you pay too much tax on your wages or pension?

Pay As You Earn (PAYE) is the system under which employers and pension providers deduct tax from wages and pensions. 

Employers should by now have given out 2009/10 P60s to all employees who worked for them at 5 April 2010 (but if you receive benefits or expense payments from your employer, you might not yet have received form P11D as the deadline for those is 6 July).  Pension providers should have done the same for pensioners. The P60 is the end of year form which summarises your earnings or pension in the last tax year. If you are a pensioner or have more than one job, you should receive a P60 from each of your pension companies or employers. 

You should always check P60s to make sure your tax looks correct as there are reasons why you might not have paid the right amount throughout the year. For example, you might have been taxed using what is referred to as an ‘emergency code’ for PAYE (otherwise known as a ‘non-cumulative’ or ‘week 1 or month 1’ code). If your P60 shows that you were on this type of code at the end of the year (look at the ‘final tax code’ box and see if ‘W1’ or ‘M1’ appears after the code number), you might not have paid the right tax and you should consider writing to HMRC to check and claim a refund if one is due. 

Pensioners on a low income can also contact TaxHelp for Older People (TOP) if they need help checking their tax is correct.  Unfortunately, pensioners are more likely than most to have wrong tax deducted as they tend to have more than one source of pension income. Do, however, be aware when contacting them that TOP have been busier than usual recently due to problems with 2010/11 PAYE coding notices. 

Did you lose your job before 5 April 2010 or were you claiming benefits?

You might also have overpaid tax if you lost your job or otherwise stopped work before 5 April 2010. Because of the way in which PAYE works – splitting your tax allowances week by week or month by month – you might not have received all your allowances if you stopped work before the end of the tax year.

If you left or lost your job before the end of the tax year, you will not have received a P60 from your former employer, as information about your employment up to the date of leaving should have been given to you on a form P45. If you had any additional benefits or received expenses payments from a former employer, you will need to contact them for form P11D. 

Even if you started claiming Jobseeker’s Allowance before 6 April, you might have been put on an ‘emergency code’ (as explained above). You should have received a P60U showing how much benefit you received, how much tax was deducted (if any) and what tax code was used.

Again, in both these situations, you might be able to claim back some tax.

So how do you claim back PAYE tax?

For PAYE repayments, you will need to write a letter to HMRC.  Mark it clearly, at the top of the letter, ‘repayment claim’ so that HMRC prioritise it on receipt. 

When you write to HMRC, use the tax office address of your current employer or pension provider.  If your payslips show a ‘PAYE Reference’, you should be able to look up the tax office address on HMRC’s contact us website page.  

In the letter, make sure you:

• give your full personal details (name, address, national insurance number);
• include as much information as possible about your employment history (PAYE Reference numbers for your employers, dates of employment, how much you earned and how much tax was deducted);  
• if you have them, enclose copies of P60s and P45s (we suggest you keep the originals);
• say why you think you are due a repayment; 
• sign your letter in ink and date it.

When you send your letter, we also recommend you keep a copy of it together with any enclosures and ask the Post Office for a proof of posting in case of later query. 

Whilst HMRC say they usually aim to process PAYE repayments within four weeks of receipt, this year there are likely to be further delays while the new NI and PAYE Service beds in.  In some cases, HMRC will need to carry out security checks.  It might help to speed up the repayment if you ask HMRC pay it direct to your bank account.  If so, give them the name of the account holder(s), sort code and account number in the letter, but be aware that HMRC might want to make additional security checks if you request repayment into an account which is not in your own name. 

If your repayment has been delayed, telephone HMRC to find out what is happening.  Don’t forget when telephoning to keep a note of the call in case of later query – read our earlier article (link below) for further guidance.

Changes to time limits for claims

Finally, remember that time limits are being shortened for claiming tax refunds for earlier years.  So when having a look to see if you might be due a tax refund for the year to 5 April 2010, at the same time it is worth considering earlier years and making claims now, if relevant, before the time limits expire.   

Useful links

LITRG guidance on claiming a tax refund on savings income
Form R40 
LITRG guidance on ‘emergency’ tax codes
TaxHelp for Older People (TOP)
‘Tax code errors – check yours now’
‘Telephoning HMRC?  Keep a careful note’
‘Reclaiming tax – time limits cut’