Could You Be Due Some Tax Back?
While we have excitingly been seeing the job market pick up in the first half of 2021, and we expect this trend to continue as the UK makes it way out of restrictions, one of the sad realities of the pandemic was people ending up out of work or on reduced salaries. If you were somebody who was employed via PAYE and you stopped working part way through the previous tax year, which ran from the 6th April 2020 to 5th April 2021, then it could be worth checking to see if you are due a tax refund.
On the standard tax code in the UK during the 2020/2021 tax year, the first £12,500 of employee earnings was tax free. This amount was broken down into a weekly or monthly tax-free entitlement of £240 per week or £1,042 per month, and you were taxed 20% on anything above this amount*. So instead of earning £12,500 and then beginning tax contributions after you’d reached this threshold, your tax-free allowance was spread across the entire tax year. This means that if you stopped working part way through the tax year, you may have overpaid tax and so may be due a refund.
How to Check
You can use the HMRC Tax Calculator to see if you are owed any tax for 2020/21 in just a few minutes here. You will need details of your previous tax year earnings and tax contributions, which can be found on the P45 or P60 form(s) you received from your previous employer. You will also need details of savings from your bank/building society and any Gift Aid donations you made.
Please note you cannot use the calculator if any of the following applies to you:
- Received taxable state benefits (including Jobseeker’s Allowance and Carer’s Allowance)
- Were entitled to claim Married Couple’s Allowance
- Were born on or before 5 April 1938 and get higher allowances
- Had other taxable income (for example, from dividends and trusts)
- Were a higher rate taxpayer and want to estimate your Gift Aid tax relief
If you were placed on furlough, this is still be counted as income and so does contribute to your taxable earnings.
How to Claim
You can use this website to check if you are eligible to claim. If you are, you can do so via your online Government Gateway, or by using a P50 form via post.
HMRC will send a cheque to you within 5 weeks of processing your claim if you are successful. If you have not heard back within 5 weeks after making an online claim and 6 weeks after making a postal claim you can contact HMRC here.
If You Received Benefits
If you did receive benefits in the previous tax year and believe you may be due a refund, you can send parts 2 and 3 of your P45 Form to Jobcentre Plus (remember to retain part 1A for your records). They will calculate if you are due a refund and pay it either after the end of the tax year or after you stop claiming taxable benefits.
If You’ve Left the UK
If you’ve left the UK and you are no longer employed, you can claim a refund by filling out a P85 form online or via post here.
Personal tax affairs can be confusing, but at Australasian Recruitment Company our payroll department is always here to help clarify any general pay or tax queries our candidates have and we can be reached on 0207 625 3300 or email@example.com.
Please note that you are personally responsible for your own tax affairs and the accuracy of all information. Should you wish to discuss your personal tax affairs in more detail please contact the HM Revenue & Customs employee helpline on 0300 200 3300.
Tax information : http://www.hmrc.gov.uk/incometax/index.htm
Tax Refund Help Line for Employees – 0300 200 3300
*If you reached the higher rate tax threshold of £37,501 – £150,000 you would have paid 40%, and the additional rate of 45% on anything above £150,000.