Overpaid Income Tax? Here's how to claim a tax refund from HMRC

How to claim a tax refund

If you pay too much Income Tax, HMRC will owe you a refund. Here we explain how to identify whether you’re due a refund for overpaid Income Tax and what steps you’ll need to take to claim it from HMRC.

There are usually two ways in which you can pay too much Income Tax. One is by having an incorrect amount of tax deducted ‘at source’ - in other words, before you receive the money - from income such as dividends, salary and bank interest. 

The other way in which you can pay too much Income Tax is by entering incorrect figures for your other income sources when you complete your Self Assessment tax return - for example, if you miss out a cost from your sole trader business. 

The steps you’ll need to take to identify whether you are due a tax refund and make the appropriate claim depend on the reason for the overpayment of Income Tax.

If you had too much Income Tax deducted at source

How will I know if I’m due a tax refund?

If too much Income Tax was deducted at source from income such as dividends, salary and bank interest, you’ll see an on-screen message telling you that you are due a tax refund when you submit your Self Assessment tax return online via HMRC or third-party software such as FreeAgent. 

This information should also be visible when you log in to either your Self Assessment account, personal tax account or business tax account

How will I get my refund?

In this scenario, you should receive the refund from HMRC automatically. HMRC has stated that where possible, it will issue the refund to the last credit or debit card that was used to make a payment on the Self Assessment account. It also lists a number of alternative repayment methods

Please note that HMRC may reduce your next tax bill instead of issuing a refund if you are due to pay tax in the next 45 days.

If you made an error on your Self Assessment tax return

How will I know if I’m due a tax refund?

If you suspect you made a mistake when you first submitted your Self Assessment tax return, you’ll need to submit an amended return and HMRC will then advise whether you are due a tax refund. 

When you complete the amended tax return, enter the required information in the appropriate boxes on the tax return and state how you’d like to receive the payment for the refund. Be sure to include your bank account number and sort code if you’d like the money to be sent to your bank account. 

How will I get my refund?

If HMRC agrees that you’re due a refund, you’ll receive a letter of confirmation. Please be aware that HMRC will never email, text or send other electronic messages about tax refunds. Check the guidance on recognising scams if you’re unsure about any communication you receive. 

If, after reviewing your amended tax return, HMRC accepts that you’re due a tax refund, you should receive your tax refund within two weeks. Please note that HMRC may reduce your next tax bill instead of issuing a refund if you are due to pay tax in the next 45 days.

If HMRC does not agree that you’re owed a tax refund or requires further information to support your claim, you’ll receive a letter advising you of this. 

If you don’t hear anything after two weeks of having made an online claim for a refund, HMRC advises that you wait four weeks from the date of your claim before getting in touch.  

Want to feel more confident about your tax position?

With FreeAgent, you can feel more confident when you file your Self Assessment tax return. Based on the data you enter throughout the year, FreeAgent auto-fills parts of your Self Assessment tax return (up to 90% of the Self Employment form if you’re a sole trader) and calculates how much you owe. Find out more about FreeAgent’s Self Assessment functionality.

Disclaimer: The content included in this blog post is based on our understanding of tax law at the time of publication. It may be subject to change and may not be applicable to your circumstances, so should not be relied upon. You are responsible for complying with tax law and should seek independent advice if you require further information about the content included in this blog post. If you don't have an accountant, take a look at our directory to find a FreeAgent Practice Partner based in your local area.

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