Feb 21

Your 7-step guide to getting money back from the tax office

Reading Time: 5 mins

Do you want to get money back from the tax office? Ooh yes!

Hundreds of thousands of people are losing money every year because of mistakes made by the tax office.

And the terrible thing is that even if they make the mistake, you are the one who is blamed. So it’s more important than ever that you do what you can to make sure your tax details are correct and that you’re not paying too much.

Actually, if you do the checks now you could find that you’ve been paying too much tax for a few years. You can claim back up to six years of overpaid tax. So you could be in for a windfall! Just follow our seven steps to tax success and you will be richer – or at least protected from nasty future bills.



Step one: Check your tax code

Taxpayers on the wrong tax code can be overcharged, so check that your coding notice makes sense and you’ve been put in the right category. You should be able to find the code on your latest payslip.

Tax codes are made up of numbers (to tell your employer your tax-free allowance) and a letter to signify what type of taxpayer you are.  The letters are as follows:

L: You get the basic personal allowance.
P: You were born between 6 April 1938 and 5th April 1948 and get the full personal allowance.
Y: You were born before 6 April 1938 and get the full personal allowance.
K: You get no tax-free pay or you owe money to HMRC.
T: This is an emergency tax code: HMRC needs further information, so cannot allocate another code.
BR: This is Basic Rate which you should only have if you have a second job. There’s no personal allowance on this code.
DO: This is where the whole amount is charged at 40%. This is most commonly used for a second job where you are already into the 40% bracket with your first job.
D1: This is where the whole amount is charged at 45%. This, again, is usually only if you have a second job or pension)
NT: There is no tax is taken from your income or pension.

To calculate your code, HMRC also deducts the value of your benefits from your personal allowance. So make sure they’ve included any taxable benefits you get at work like a company car or private medical insurance. If they haven’t included those now then you could find yourself slapped with an extra tax bill in a year or so when they suddenly realise that you owe them.


Step two: Make sure you have your personal allowance

Your personal allowance shows how much income you can receive from earnings, pensions and savings before paying tax. For this tax year, which runs from 6 April 2014 to 5 April 2015, it is £10,000 for the under 65s and £10,660 for over 75s. The basic rate tax of 20% is charged on the next £31,865. Income over £31,866 is taxed at the higher rate of 40%.

Married Couple’s Allowance could reduce your tax bill by £314 to £816.50 a year. You can claim this allowance if you’re married or in a civil partnership, you’re living with your spouse or civil partner and one of you was born before 6 April 1935. For marriages before 05 December 2005, the husband’s income is used to work the allowance out and for marriages or civil partnerships it’s the income of the highest earner.

If you’ve earned less than your allowance in a tax year but you’ve still been taxed, contact your HM Revenue & Customs (HMRC) office to claim a rebate.


Step three: Get the tax offices in contact with each other

taxIf you have more than one source of income, such as two part-time jobs for example, there may be two tax offices dealing with them. It’s quite possible that they don’t talk to each other and each has no idea about your other income. This means that you could either be being taxed twice or not at all.

Obviously, if you’ve been taxed twice then you’re owed money! Go get it – contact both tax offices and get them to sort it out between them. Sadly, if you haven’t been taxed at all, that doesn’t mean you can get away with it. It probably means that in a few years’ time you will get a big bill for the unpaid amount, so get it sorted now to avoid that shock.


Step four: Avoid tax on your savings

Savings interest (the interest you get from savings accounts, bank accounts, building society accounts etc) is taxed at 20%. If you or your children are not taxpayers, then fill in an R85 form at your bank or building society so your interest can be paid tax free. This will boost your savings income at a stroke.

Even if you’re a taxpayer, remember you’re allowed to put £20,000 into a cash savings account every year – tax free. Find the best cash ISAs here and apply now to make the most of your allowance this year.


Step five: Give the taxman your correct address

The tax office has the wrong address for thousands of people so if you haven’t heard from them for over a year, get in touch and make sure they have your current address. There are two reasons why you should do this:

  • They might have a nice rebate for you which they will send to you as a cheque. If they have the wrong address for you, you won’t get it.
  • You might owe them money. If they think you do then they could have been writing to you at the wrong address for years. The money you owe them will be growing and growing during that time and if you don’t sort it out now you will get a truly nasty bill some way down the line, and possibly even a court case!


Step six: Check your tax details yourself

One of the particularly annoying aspects of tax is that whatever happens, whoever actually makes a mistake, ultimately it’s your responsibility. Even if the HMRC employees are negligent or mistaken, or letters get lost in the post, you are the one who takes the rap at the end.

So check, re-check and check again that your tax code, your self-assessment form and all the details about you and your tax situation are right. Do ring up HMRC as often as you like to get them to help. Generally they are very helpful if you are genuine and respectful. Make sure you make a note of phone calls, when they were made, what was said etc, if your situation is a bit complicated. Ideally, follow up phone calls with a letter. Keep a paper trail. If things get really difficult then it is worth hiring an accountant to take over your affairs and argue your case with HMRC.


Step seven: Complain, complain, complain

If you are in dispute with HMRC and you believe you are right then persist, persist and persist again. Generally, if you demonstrate that you’re not willing to back down and will argue your case to the end they will concede. So if you truly believe you are right, stick to your guns!

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I would kiss you if i could, you have done me a big favor thanks and God bless you. maybe you could shade abit of light to this i am confused. If i got a bill from the HMRC saying ( Plus other adjustments ) underpayment £607 whats that suppose to mean?

Umbrella Companies
Umbrella Companies

Awesome content Jasmine – thanks for a very helpful post. It’s frightening just how many incorrect PAYE coding notices get sent out by HMRC each year. Taking responsibility and checking your tax code has never been more important….

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