Taxes are a truth of everyday life. We all pay them, right? It’s a way to pay for everything, literally! From schools and hospitals to roads and public services!! These taxes are collected and managed by HMRC in the UK. Sometimes, things don't quite go according to plan, and you may end up paying more tax than is due. If that happens, you could be entitled to an HMRC tax refund.

In this blog, the Crytpo Accountants will explain what an HRMC tax refund is!! Why you might well be due for one? How to make an HMRC tax refund claim? Well, let's get started!!!

What is the HMRC Tax Refund?

An HMRC tax refund is a return on your taxes, which were overpaid to the government!! Yes! That may happen.

Think about it just as you would when you have overpaid for something at a shop. Won't you expect to get that money refunded? Right!!

So, tax refunds work in just the same way.

Common Reasons for Overpayments

Why do these overpayments happen? Let’s look at some of the reasons!

Overpaid Income Tax

Perhaps you had a temporary job, or your employer used the wrong tax code. Either way, you might have overpaid.

Overpaid National Insurance Contributions

You could have overpaid in NICs at a job change or having some self-employment.

Tax Code Mistakes

Some of the errors in your tax code that can lead to overpayment are wrong allowances.

Capital Gains Tax

Sold a property or some investments? You may have overpaid the capital gains tax!!!

Self-Employed Overpayments

When you are self-employed, you may overpay your tax or national insurance contributions.

Refund of Repaid Student Loans

Do you have your student loans paid off, but payments continue to go out? You can get that money back.

Tip: Keep an eye on your tax code and any letters from HMRC. Sometimes, they update your tax code with little notice, which can lead to surprises!

How to Claim an HMRC Tax Refund?

Now that you know why you could be owed back tax, let's look at how to get that money back.

There are different ways, depending on the type of overpayment, but here is a general guide to claiming your HMRC refund:

1- Overpaid Income Tax

Check that you're due a refund before claiming one. You can do this using your P60, P45, or payslips.

Tell HMRC you think you've overpaid on their website, by phone, or in writing. You'll need to get together all the supporting documents that might be required.

2- Overpaid National Insurance Contributions

You can check your National Insurance record online through your tax account on HMRC's website.

You will need to contact HMRC regarding the overpayment, after which they will communicate the required steps.

3- Tax Code Mistakes

If you need the right tax code, inform HMRC by phone or through your tax account.

HMRC requires information about your employment, your income, and the benefits that you received to change your tax code.

4- Overpaid Capital Gains Tax

Claim this through your annual self-assessment if you have overpaid Capital Gains Tax. Attach the documents on the sale of assets showing receipts at purchase and sale.

5- Overpayment If Self-Employed

When filing your self-assessment correctly, use your income, expenses incurred, and deductions.

Keep detailed records to support your claims.

6- Inheritance Tax

Inheritance Tax can be tricky. It would pay to get help from a tax professional to ensure everything is right.

7- Repaid Student Loans

Call HMR!!! Let them know you paid off your student loans, and they will set up a refund of what you overpaid.

Tips to Manage Your Taxes Online

HMRC offers online services to help you easily deal with your taxes and refunds.

You can:

View and amend your tax code
Track your National Insurance contributions
View your sources of income and tax relief allowances, updating them if required
Send your Self-Assessment tax return
Track your refund request
Access key tax forms and documents in your tax account

Just set up a personal tax account with HMRC online. Nice and convenient way to keep up to date on your tax stuff.

Things You Should Know About Claiming a Tax Refund

While claiming your tax refund, keep these things in mind:

Deadlines: The sooner you file, the better.
Record Keeping: Organize your financial records to trace overpayments easily and justify your claim.
Professional Assistance: In complicated tax issues, a tax professional can be resorted to make the process easier.
Verification Process: HMRC may have to check your claim. Be ready to provide whatever other information they may ask for.
Overpayment Repayments: HMRC may deduct the amount from future payments if you have received overpaid benefits. This may have implications for your financial planning.

Final Notes by Crypto Accountants!

An HMRC tax refund is a way to get one's money back if too much tax has been paid. Knowing the reasons for overpayment and the procedure to be followed while claiming your refund will ensure you get the money due to you. Now more than ever, utilizing HMRC online services and your tax account makes it easy to handle your tax matters.

Yeah, it might take a little time!! But it will be worth it if that refund comes to your account. Take charge of your taxes and claim your refund; don't let those dollars you've worked hard to earn through your sweat slip away!

Talk to the Crypto Accountants for more information.

7 Times When You Can Claim HMRC Tax Refund