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How do I claim tax back?

Basics

If you have paid too much tax, or ‘overpaid’ tax, and you complete a tax return, HMRC will send you a repayment once they have processed your tax return.

If you are not within self assessment, that is, you do not complete a tax return, you can still claim back overpaid tax.

What information is in this section?

Claiming back a straightforward overpayment of tax should usually be easy enough to do yourself. But exactly how you do it depends on the type of income you have. Choose the section that applies to you.

We also look at tax refund companies and explain why you should be careful of them..

What are the time limits for claiming back tax?

You have four years from the end of the tax year in which the overpayment arose to claim a refund, as shown below. If a claim is not made within the time limit you will lose out on any refund that may be due.

Tax year 2011/12 (year ended 5 April 2012) - claim by 5 April 2016

Tax year 2012/13 (year ended 5 April 2013) - claim by 5 April 2017

Tax year 2013/14 (year ended 5 April 2014) - claim by 5 April 2018

Tax year 2014/15 (year ended 5 April 2015) - claim by 5 April 2019

Tax year 2015/16 (year ended 5 April 2016) - claim by 5 April 2020

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Through Pay As You Earn

How do I claim back tax I have overpaid through PAYE on wages or pensions?

This section looks at what to do if you have paid too much tax on your wages or pension and what the time limits are for making a claim.

First though, we look briefly at HMRC’s P800 tax calculation process, which may mean you do not need to claim a repayment, as HMRC will issue any repayment automatically. If you have not received a P800 tax calculation from HMRC, and you have overpaid tax, you will need to make a claim for a tax repayment.

What is a P800 tax calculation?

Your employer or pension provider gives HM Revenue & Customs (‘HMRC’) details of how much income you have received, how much tax you have paid and the value of any benefits in kind you have received during the tax year.

Using this information, HMRC carry out an automatic reconciliation at the end of each tax year, to work out whether or not you have paid the right amount of tax. If HMRC think you have not paid the right amount of tax, they send you a P800 tax calculation. This calculation will show you what tax HMRC think you should have paid.

You must always check your P800 tax calculation carefully, as HMRC may not have all the information they need to calculate your tax correctly, or they may have inaccurate information.

If HMRC think you have overpaid tax, they will send you a repayment of tax automatically – you do not need to make a claim.

If HMRC think you have not paid enough tax, they will write to you explaining that they intend to collect the underpaid tax through your tax code or telling you how you can repay it to them.

For more information on what to do if you receive a P800 tax calculation, please read our section ‘When things go wrong’, ‘Complaint or Appeal’

How do I claim a refund for the current tax year?

If you receive employment income or pension income and pay tax through the PAYE system you may sometimes pay too much tax. There are various reasons for this. HMRC provide a list of typical reasons for an overpayment of income tax arising on employment income. They also provide a list of reasons why an overpayment might arise on pension income.

If you think you have overpaid tax through PAYE in the current tax year, before the end of the tax year tell HMRC why you think you have paid too much. It is probably best to telephone them initially and the helpline for individuals and employees can be found on the HMRC website.

Before you telephone HMRC, you will need to gather together:

  • your personal details – such as your full name, address, date of birth and National Insurance number;
  • details of each of your employers or pension providers – their PAYE scheme reference number, which should be shown on your payslip, or ask your employer or pension provider for it;
  • estimates of your earnings and pensions from each source for the current tax year.

Make sure you keep a note, in a safe place for future reference, of:
 

  • the date and time of the phone call;
  • the name of the adviser you spoke to; and
  • what was said by both you and the HMRC adviser.

You may need to send in more information to support your claim and if so HMRC will let you know what paperwork you should supply.

Once HMRC process your claim it might be necessary to issue you with a new tax code, meaning any refund will be added to your wages or pension and the amount will generally be paid automatically through the payroll. This will result in a lower tax deduction or a tax refund through PAYE.

However if the repayment is due towards the end of the tax year and you have already received your final pay for that year, you may have to claim a refund directly from HMRC.

How do I claim a refund if I have stopped working part way through the tax year?

If you have stopped work part way through the tax year and are not going to have a continuing source of taxable income, for example, you are not intending to go back to work within four weeks or claiming a state benefit, you should be able to claim an in-year tax repayment using form P50.

You must send parts 2 and 3 of your P45 together with form P50 to HMRC. If you are entitled to a repayment of income tax, HMRC will send it to you – usually by cheque in the post.

You cannot use form P50 if you are claiming, or intending to claim a state benefit such as jobseeker’s allowance (‘JSA’).

If, for example, you stop work in June, having been employed at some point since the beginning of the tax year on 6 April, and you do not get another job but start to claim JSA, you will need to let Jobcentre Plus have your form P45 from that paid work. They will then put the details onto their computer. If you have already paid some tax under PAYE in the year, you will not get this refunded until the earlier of:

  • ceasing to claim JSA – in which case your refund comes from Jobcentre Plus;
  • the end of the tax year – in which case, you have to liaise direct with HMRC for your refund.

How do I claim a refund after the end of the tax year and for previous tax years?

If you have paid too much tax through your employment and the end of the tax year in which you overpaid tax has already passed you can make a claim for a refund by writing to HMRC.

Mark the top of your letter clearly with ‘repayment claim’ so that HMRC prioritise it on receipt.

You can write to HMRC using the tax office address of your current employer or the postal address on the most recent correspondence you have from HMRC. If you do not have any recent documents or letters from HMRC, write to:

HM Revenue & Customs
Pay As You Earn and SA
BX9 1AS

Generally your letter, should include:

  • give your full personal details – your name, address and national insurance number;
  • include as much information as possible about your employment history, for example, PAYE reference numbers for your employers, dates of employment, how much you earned and how much tax was deducted;
  • enclose copies of P60s and P45s if you have them – keep the originals;
  • say why you think you are due a repayment;
  • be signed and dated in ink.

Keep a copy of your letter and any enclosures and ask the Post Office for a proof of posting in case of later query.

HMRC say they usually aim to process PAYE repayments within four weeks of receipt. In some cases, HMRC will need to carry out security checks. It might help to speed up the repayment if you ask HMRC to pay it direct to your bank account. To request a direct bank transfer, include in the letter:

  • the name of the account holder(s);
  • the sort code; and
  • the account number.

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.

In most cases you can get back the tax you have overpaid as long as you claim on time. The time limits for claiming a refund are shown in the section below. If you fail to make a claim within the time limit you will miss out on any refund due.

What can I do if I am too late to make a claim for a repayment?

Claiming back tax for 'closed' tax years - Extra-statutory Concession B41

If you think you have overpaid tax in tax years that are ‘closed’ to reclaims, there is a rule known as Extra-statutory Concession B41 which can allow HMRC to repay tax for those earlier years. This only applies in limited circumstances.

This concession only applies in situations where HMRC or another government department, such as the Department for Work and Pensions, have made an error in your tax affairs and where there is no doubt about the facts of the case.

The relevant part of the concession reads as follows:

‘....However, repayments of tax will be made in respect of claims made outside the statutory time limit where an over-payment of tax has arisen because of an error by HMRC or another Government Department, and where there is no dispute or doubt as to the facts.....'

In our experience, it is rare for HMRC to grant this concession so you will need to set out clear evidence as to what the error was, which resulted in you paying too much tax.

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If you complete a self assessment

How do I claim back tax if I am in self assessment?

If you are in self assessment and you overpay tax, you do not need to submit a separate claim for repayment. You claim your tax repayment through your self assessment tax return.

How do tax repayments through self assessment generally work?

If you overpay tax on your income and you complete a self assessment tax return, HMRC will deal with your repayment once they have processed your tax return.

You can state in the tax return how you would like the repayment to be paid to you. You can have it:

  • paid directly into your bank account,
  • paid to you by cheque, or
  • deducted from your next self assessment tax liability, for example, against the next tax year’s ‘payment on account’ if you are due to make one.

Alternatively, if you owe HMRC another amount, for example, a tax credits overpayment, you might ask them to ‘offset’ the repayment against that amount. This means they will take the amount you are due to be repaid off the other amount you owe. They will then repay any remaining repayment or you will have to pay the rest if you still owe some.

You complete your tax return after the end of the tax year. The sooner you submit your tax return, the sooner you will receive your repayment, or offset. If you submit your tax return online rather than on paper, it might be dealt with sooner and you will get your repayment faster.
HMRC sometimes also want to check some things before sending your repayment, as part of their aims to prevent unscrupulous people claiming tax back fraudulently. If you have been waiting several weeks to hear back from HMRC about your refund, we suggest you telephone them to find out what is happening.

How do I claim a refund if I made a mistake on my tax return?

Sometimes you may make a mistake on your tax return and pay too much tax.

In this situation, you need to amend or correct your tax return first. Once HMRC have processed the amended tax return, they will send you any repayment due or offset it against other amounts that you owe.

There are time limits for correcting your tax return. The normal limit is 12 months from the 31 January after the end of the tax year. For example, the normal deadline for amending your 2014/15 tax return is 31 January 2017 and  a 2015/16 tax return is 31 January 2018.

How do I claim a refund if it is too late to amend my tax return?

If you made a mistake in your tax return, and paid too much tax, but only realise after the deadline for amending the tax return has passed, you may still be able to claim a repayment of overpaid tax.

In this situation you will need to write to HMRC and tell them about your mistake. You can write to HMRC using the postal address on the most recent correspondence you have from them, or to
HM Revenue & Customs
Pay As You Earn
BX9 1AS

Your letter, should:

  • give your full personal details – your name, address, national insurance number and unique taxpayer reference (‘UTR’);
  • refer to the tax year to which the repayment relates;
  • include as much information as possible about why you think you have paid too much tax and the mistake you made;
  • enclose evidence of the tax that you have paid, including copies of P60s and P45s if you have them – keep the originals;
  • say how you would like to receive any repayment – you can have it paid directly into your bank account, paid by cheque, or deducted from your next self assessment tax liability;
  • be signed and dated in ink.

Keep a copy of your letter and any enclosures and ask the Post Office for a proof of posting in case of later query.

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How do I claim back tax on savings income?

Prior to the tax year 2016/17  income from savings, for example, bank or building society interest, was normally received net of tax. This meant that the bank or building society, or other savings provider, had taken tax off before you got it. This deduction of income tax was normally at the basic rate of 20%. From April 2016 this is no longer the case and you will receive the interest gross (without tax being taken off), the responsibility then falls to you to tell HMRC if you owe any tax. Read the section on 'What tax allowances apply to me?'.

For tax years 2015/16 and earlier, if you are on a low income, you may be able to get back some or all of the tax you have paid on your interest.

We explain how to claim a refund of tax paid on savings income in this section. This section is for people who are not within self assessment, that is, people who do not have to fill in a tax return.

How do I claim back overpaid tax on savings income?

Prior to 2016/17, tax was automatically taken off the interest on UK savings at the rate of 20%. You may need to claim a repayment of tax, if any of your savings income should only have been subject to the 0% starting rate of tax for savings or should not have been taxed at all.

To claim back overpaid tax on savings income you need to fill in a form R40.

If you have already filled in a form R40 in earlier years, you should receive one automatically each tax year. The form will show the HMRC office address to which you need to send in the completed R40.

If you have not filled in a form R40 before then you can get the form online or request a copy by telephoning HMRC 0300 200 3312. The form comes with guidance notes to help you. When it is complete, send it to;

HM Revenue & Customs
PAYE
BX9 1AS

What information do I need to keep?

Keep:

  • a copy of the completed form R40 before you send it to HMRC
  • proof of postage from the Post Office recording the date you sent it to HMRC, in case of later query
  • the paperwork to support the claim for repayment for at least two years from the end of the tax year for which the claim is made
  • interest certificates and bank statements for each of your bank and building society accounts
  • paperwork relating to any other savings income, such as the interest element of a purchased life annuity
  • dividend vouchers, as you will need to include any dividends and their associated 10% tax credits on the form R40.

What information do I need to give HMRC to claim a repayment of tax?

Put your National Insurance number on the R40 form and in any accompanying letter.

You do not need to send interest certificates and bank statements with your claim, but HMRC might ask to see them before they process the form. If so, you will probably be asked for the originals. If so, take copies for your own records first.

Your bank or building society may not give you an interest certificate automatically, but you can ask them to send you one. The bank or building society have to send you a certificate free of charge if you ask for one and they have not sent one out before.

If you have lost an interest certificate and ask the bank or building society for a duplicate, they may charge you, so it is usually best to find out first how much a duplicate interest certificate will cost.

Do I have to wait until after the end of the tax year to make a claim?

You need not wait until the end of the tax year to make a claim, though you may have to make a provisional claim and a final claim if you cannot provide the exact figures if you claim before the tax year end.

How soon will I get my repayment of tax?

HMRC do not give specific guidance as to how long a repayment claim will take to process. HMRC sometimes want to check some things before sending your repayment, as part of their aims to prevent unscrupulous people claiming tax back fraudulently.

Between April and September following the end of the tax year there may be delays as this is the most popular time for sending in the forms.
You may also have to wait longer if HMRC decide they need to see supporting information, such as, interest certificates.

If you are worried that your repayment is taking a long time to appear, you should telephone HMRC on 0300 200 3300 and have your National Insurance number to hand.

Having you Interest paid gross 2015/16 and earlier

If your total taxable income is less than your allowances, or if your savings income is within your allowances plus £5,000, you may be eligible to complete form R85 for each of your bank and building society accounts. This means you can receive your bank and building society interest gross, without having tax deducted. You may be able to prevent an overpayment of tax arising in the first place. There is more information in the section on other tax issues.

From 2016/17 banks and building societies will not deduct tax at source.

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When I have cashed in my small pension

Included in this section;

  • Trivial Commutations
  • Pension flexibility

Trivial commutations (cashing in your whole pension pot)

Rules which came into force on 6 April 2006 mean that if your total pension savings are very low, you can draw the whole lot out as cash. This is called ‘trivial commutation’. If the total of all your occupational and personal pension funds does not exceed a certain limit (£30,000 from 27th March 2014), then you may cash them in and collect them straightaway without having to buy an annuity (pension).

From April 2015 only defined benefit pension schemes (often known as final salary) will be able to make trivial commutation payments. The age limit also reduces to the normal minimum pension age currently 55. A payment is called ‘trivial’ if the value of all an individual’s pension ‘pots’ is below £30,000 and it is taken as a lump sum. An occupational pension scheme benefit worth £10,000 or less can also be taken as a small lump sum separately from the triviality rule above. In addition small pension pots, up to £10,000 can be taken as a lump sum regardless of the value of all the ‘pots’. You can do this for up to a maximum of three pension pots.

Of the total, you may receive 25% as a tax-free sum and the remainder is taxable at your top rate of tax (known as your marginal rate). This means that the taxable portion is added to your other taxable income. Incidentally, this 25% tax free amount only applies if you haven’t yet started to receive the pension. If you have then, unfortunately, the whole of the payment is taxable at your marginal rate.

Any amount taken in this way which is over the amount of tax free cash available, is taxed as normal income.

Since 2013 the taxable portion of the lump sum will be taxed at Basic Rate (BR). In many cases this will be correct and there will be no further tax due or tax to be repaid. For those of you, however, who started from a non-taxpayer position, i.e. other income below their personal allowances, there will be a need to ask for an immediate repayment using form P53, (available by calling HMRC, 0300 200 3300 or the online version at www.hmrc.gov.uk) since you will have lost out on the unused part of your allowances; whereas those who get pushed into a higher tax band by the addition of the lump sum may need to pay some extra tax.

Note – working out how much your pension funds are worth for this purpose may not be straightforward, especially if you have an occupational pension scheme, so speak to your pension provider or the Pensions Advisory Service.

PENSION FLEXIBILITY From 6 APRIL 2015

The Key Changes

The changes mainly affect people with defined contribution pensions, more commonly known as money purchase schemes. These include individual, group personal, stakeholder pensions, most additional voluntary contribution schemes (AVCs) and self-invested personal pensions (SIPPs). This means the changes apply to you if you have built up one or more ‘pots’ of cash or investments in pensions and you have to decide what you do with it. The changes mostly do NOT cover defined benefit schemes, often known as final salary pensions. These are pensions where the money you take from them is worked out based upon how much you earned with an employer and how long you were a scheme member. The rules of some pension schemes do not allow withdrawal of some sums, even though the tax rules now allow them. Pension providers have been permitted by law to override their own rules, but they do not have to do so. This means that your pension provider might refuse to do some of the things that the general pension rules allow. If you are unsure which type of pension you are paying into or want to know what you will be allowed to do, ask your scheme provider.

The main changes include:

  • Flexible access to pensions from the age of 55
  • Freedom in the way ‘tax free’ cash can be taken
  • Removing restrictions on ‘drawdown’ arrangements
  • Abolition of the 55% pension ‘death tax’

The Government has also guaranteed that everyone with a defined contribution pension will be offered free, impartial guidance. This aims to cover the range of options available, helping you to make sound decisions and get the most from your choices. This ‘Pension Wise’ service is available from:

  • The Pensions Advisory Service (TPAS)
  • Citizens Advice Bureau (CAB)
  • Pension Wise and the Money Advice Service (MAS)

Contact details are at the end of this section.

Flexible access to pensions from the age of 55

Up to now, most people who have saved in a pension scheme have then used the money to buy an annuity which gives a guaranteed income in the form of a pension. From April 2015, you have more options. You can decide how much and when you take money out of your pension (often called a ‘pension pot’). In theory and whilst the ‘pot’ lasts, you will be able to take out as much as you like, whenever you like. The three main choices available will be:

  • To withdraw all of the money in one go
  • Leave it in the scheme and take a regular or occasional income
  • Buy an annuity or enter into a ‘drawdown’ arrangement

Or

  • A combination of all three.

The tax implications of these options depend on your own personal circumstances and will be covered later in this guide. Taking benefits in any of the ways highlighted above will mean that future contributions to money purchase plans could be restricted. Essentially, they will be limited (with exceptions) to a maximum of £10,000 per year. If you think that this might impact on your plans, we recommend that you seek independent financial advice. The March 2015 Budget announced (then delayed)that people already receiving their pension in the form of an annuity may, from 6 April 2016 (delayed to at least April 2017), also take advantage of the new ‘pensions freedoms’. This means that you may be able to sell an existing annuity to a third party (not your pension provider) and use the money to get a lump sum or a flexible income ‘drawdown’. From 6 April 2016, the flat-rate tax charge (up to 55%) on that disposal will also be abolished so that your payment will be taxed as income.

Freedom in the way ‘tax free’ cash can be taken

Most people can already take up to 25% of their pension ‘pot’ as a tax free cash lump sum. From April 2015, how you choose to do this has changed. The options now are:

  • Take 25% of the pot tax free in one go, meaning any further withdrawals will be taxed as income;

Or

  • Take 25% of every cash withdrawal tax free, with the remaining 75% taxable as income.

TAXATION IN MORE DETAIL

If your scheme provider allows, you can use your pension pot ‘like a bank account’ rather than buying an annuity. Under these new rules you have two options, you can:

  • take part of your fund
  • take all of your fund

But you will need to watch out as you could have to pay tax on what you take out – so it’s not as easy as when you take money out of a bank account! If you choose to take part of your fund, you will first decide whether you take 25% of the whole fund as a tax free amount or 25% of each withdrawal. Whichever you choose, any amount taken in excess of the 25% will be taxed under Pay As You Earn (PAYE). If you choose to take all of your fund, 25% will be tax free and the remaining amount will be taxed under PAYE. In most cases these payments will be taxed without consideration to any other income you may have during the tax year. This will mean that you could pay too much tax (an ‘overpayment’) or not enough tax (an ‘underpayment’) by the end of the tax year.

How your pension payment is taxed

Tax is taken using the PAYE system. If you are or have been an employee, you may recognise this as similar to the way your employer took tax off your wages or salary.

How your pension payment is taxed depends on whether:

  • you decide to take part or all of your fund
  • you have other PAYE income and
  • you receive the State Pension.

As above, only part of your pension payment might be taxable, depending on how you choose to use your tax free cash sum. The following comments apply only to the part of the sum that is to be taxed. The pension provider uses a PAYE code number, but this is worked out on an ‘emergency’ or ‘month1/week1’ basis (see below for more detail on this); unless you give them an ‘in year’ P45. If you have stopped work you will get a P45 from your previous employer. It will show how much you have earned and how much tax you have paid since 6 April, and what code number your employer has been using. You might also get one from another pension provider, if you have taken everything out of a single pension pot. If you give your pension provider a P45, they should use the code number from it.

Getting your tax back

The system differs depending on whether you have;

  • Taken all of your money out of a pension pot
  • Taken part of your money out of a pension

If you take all of your money out of a pension pot

If you pay your tax under PAYE you can claim the overpaid amount back during the tax year. Your scheme provider should provide you with a P45 showing details of the payment. You may have to send this form to HMRC when you claim a repayment.

If you have no other income or just receive your State Pension, use form P50Z.

If you have other PAYE income, use form P53Z. You can either telephone HMRC for the forms (telephone number given at the bottom of this section), or search www.GOV.UK for P50Z, P53Z.

This ability to claim back tax during the tax year applies if you have taken everything out of a pension pot. For instance, you had £20,000 with XYZ Mutual and have taken all of the money and tax has been taken under PAYE. There is nothing left with XYZ Mutual (though you might still have another pension pot – say, £10,000 with ABC Investments – that you have not touched; that does not matter).

If you do not send in a claim during the tax year, HMRC should look at all of your PAYE records after the end of the tax year. Where there has been a tax overpayment of any amount or an underpayment of at least £50, HMRC will send you a ‘P800’ calculation. This should pick up on overpayments that haven’t been claimed within the tax year. But if the system fails, you may not hear from HMRC or you may get a P800 calculation that is incorrect, so you need to try to understand your situation for yourself.

If you usually complete a self-assessment tax return, you will have to wait until the end of the year to balance your account.

If you have taken only part of your money out of a pension pot

Tax overpayments and underpayments will be dealt with under the normal PAYE rules. This means that you will not be able to claim back tax during the tax year if you have not taken everything out of a pension pot.

So let’s say you had two pension pots, one of £20,000 and the other of £10,000. You have taken out £5,000 from the first, so there is still £15,000 left in it. Although your pension provider will take some tax under PAYE and tell HMRC about the payment and tax deduction, they will not issue a P45 as you still have money left in the pot. HMRC should issue a code number to the pension provider in case you take any more payments from it during the tax year (in which case the PAYE system might give you a refund of earlier tax paid), but normally you will have to wait until after the end of the tax year to get back any overpayment.

There is an exception to the above which applies if you only intend to take a single part payment in a tax year. In that instance you can reclaim any overpaid tax during the year using form P55.

As above, if you haven’t made a claim during the tax year HMRC should look at all of your PAYE records after the end of the tax year. Where there has been a tax overpayment of any amount or an underpayment of at least £50, HMRC will send you a ‘P800’ calculation. This should pick up on overpayments that haven’t been claimed within the tax year. But once again if the system fails, you may not hear from HMRC or you may get a P800 calculation that is incorrect, so you need to try to understand your situation for yourself.

If you usually complete a self-assessment tax return, you will have to wait until the end of the year to balance your account.

Pension Wise

www.pensionwise.gov.uk

The Government’s guidance service. Visit the website for general information on taking money out of a defined contribution pension.

T: 030 0330 1001

For a telephone or face to face appointment, between 8am and 10pm, Monday to Sunday. Calls cost the same as a normal call - if your calls are free, it’s included.

The Pension Advisory Service

www.pensionsadvisoryservice.org.uk

T: 0300 123 1047

For other pensions help, particularly with defined benefits pensions.

Money Advice Service

www.moneyadviceservice.org.uk

Free and impartial money advice, set up by government

T: 0300 500 5000

Monday to Friday, 8am to 8pm Saturday, 9am to 1pm

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About tax refund companies

What are tax refund companies and why should I be careful of them?

Tax refund companies, or tax refund organisations, are businesses that specialise in offering services to help you submit a tax repayment claim. They charge for these services. Tax refund organisations often operate online.

Websites for tax refund organisations often use headlines to catch your attention, for example, suggesting that you might be due a large amount of money from HMRC and that they can make claiming a refund easy for you. Some organisations also indicate that they are ‘HMRC approved agents’.

Often, it is straightforward to make a claim for a tax repayment, and you can make the claim yourself at little or no cost.
Most tax refund organisations charge a minimum fee and this can reduce or eliminate the benefit of making a claim for a tax repayment, depending on the amount of tax involved.

Why should I be careful of tax refund organisations?

You should be careful of using a refund organisation to make a claim for a tax repayment for various reasons:

Cost:

The costs charged by refund organisations vary, but often the charge is the higher of:

  1. a minimum charge, and
  2. a percentage of the tax repayment obtained.

This means that the charge may outweigh your repayment if it is only small.

Potentially false claims about their status:

Tax refund organisations are not HMRC approved agents. They may be registered with HMRC for Money Laundering purposes and be registered with HMRC as an agent for the purposes of acting on your behalf. But this does not mean that the organisation has received any formal approval from HMRC.

Data protection – possible concerns:

You may be asked to sign a form 64-8 authority. This gives HMRC the authority to correspond with the tax refund organisation about your tax affairs. You may find that you have to keep using the services of the tax refund organisation year after year, if you do not take steps to remove the authority after you have used the organisation’s services.

Receiving your refund:

Tax refund organisations normally request authority to receive the repayment on your behalf. They will then deduct their fee and pass the balance to you, perhaps by direct transfer to your own bank account. This creates risks, for example that you might not receive your repayment at all, and that you are sharing your own bank details with the organisation, potentially exposing you to personal fraud.

Tax refund organisations may not be unscrupulous or do anything wrong. In addition, you might prefer to employ a qualified tax adviser and pay a fee to them for helping you claim a refund, particularly if you do not understand or have time to do the paperwork yourself, for example.

But as noted above, many refunds are straightforward to claim and we would recommend that you at least try to understand your taxes for yourself even if you do decide to get an agent’s help.

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