How To Qualify For An Income Tax Repayment

There are about one in three of British taxpayers who are due a tax refund.

Taxation repayments can derive from different income sources.

These sources of income could arise from a self employed business such as a profession or trade or an employment position where paye tax has been deducted at the time of payment.

If in employment then you might be able to justify a deduction for business expenses that have been incurred but not reimbursed by your employer.

The type of trade that might qualify for a tax refund could be a person who provides and uses their own tools like a car mechanic.

In these types of trade you might be able to carrry back the repayment claim for up to six tax years.

Another very good example would be a mobile carer who visits clients in their own homes and may therfore use their own car.

If a claim for motoring costs has not been paid by your employer or paid at a lower rate than that which can be claimed you may be able to claim for these expenses as a tax deduction against your income.

Another possibility is that an income tax over payment may become due is where people leave Great Britian before the end of the tax year and have no possibility toreturn and take up another job before the end of the tax year. In those circumstances they will probably be due to claim a Tax refund as they will not have used up all of their personal allowances which under the PAYE scheme build up evenly over twelve months.

Yet another way that you may qualify for a refund could be that you started a PAYE employment part or mid way through a tax year where you were taxed on a month 1 basis. This can often happen when people work for the first time, perhaps when they first come to the UK. Where a PAYE code has been issued as a month or week 1 basis it means that the tax free part of the pay is calculated only on each monthly or weekly monthly payroll and not on an accumulative basis.

So if you started your employment half way into the Tax Year and were issued with a month one code then at the end of the tax year you would only have had the use of part of the personal allowances and in that way you would have unused allowances that would give rise to a tax repayment.

Anormal paye code is one which is not on a month one basis will allow the tax free pay to build up evenly over the tax year so that the Tax due would be calculated correctly and in those circumstances there would be no refund due.However more often than not a week 1 paye codewill mean that an income tax overpayment may be due. If you are entitled toan income tax repayment it may be possible to claim for the last six tax years.

People often ask for how many earlier years can you claim a tax refund for ? If you are due a refund it is possible to claim back the last six tax years. The British tax year runs from the 6th April to the 5th April in each tax year.

As that very famous advert states"Tax does not have to be taxing" but it is very complicated and in less than plain language.

The paperwork which your employer will have handed to you at the end of the tax year which is known as a form P60 will be needed. If you do not have one of these it may be because you left before the end of the tax year in which case you should have received a form P45 when you left. If you are unable to locate these original documents then you should be able to obtain a statement of the earnings from your previous employer. This together with a schedule of the dates you started and left with details of your gross income.

Taxes in Great Britain are extremely convoluted so it is a very good idea to get an agent to help you get the refund that is properly due to you.


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The Author writes many articles on Income Tax and for more information please go to Paye Refund