Your Guide to Claiming a Tax Refund As An Employee

You’re reviewing your finances when suddenly, a thought pops into your head. “Wait a minute, have I been paying too much tax?” 

It’s a question that’s crossed the mind of many a taxpayer, and with good reason.

While overpaying is quite uncommon, it does still happen. 

Here, we’ll explain what you need to know about tax refunds, how you know if you’re owed one, and, most importantly, how you can claim one.

Understanding Tax Refunds

First things first, what is a tax refund?

In simple terms, it’s money that you’ve overpaid in taxes throughout the year. This can happen for a variety of reasons, which we’ll explore shortly. When you’ve paid too much, HMRC  owes you money back.

You might be thinking, “But I didn’t do anything wrong! How could I have overpaid?” Don’t worry, it’s more common than you think.

HMRC has a dedicated tool for claiming a tax refund. It also guides you through the main situations.

Reasons You Might Be Owed a Refund

There are several scenarios where you might have paid too much tax. Understanding these can help you identify if you might be due a refund.

1. You Were Put on an Emergency Tax Code

One of the most common reasons for overpaying tax is being placed on an emergency tax code when starting a new job. This typically happens if:

• You didn’t provide a P45 from your previous employer.
• Your employer didn’t receive your tax details from HMRC in time.
• You had a gap between jobs, and your new employer assumed you were starting fresh.

Emergency tax codes often appear as 1257L W1/M1 or BR, which could mean:

• You might not receive your full Personal Allowance.
• All your income could be taxed at 20% or more, even if some of it should be tax-free.

To rectify this:

1. Check your payslip for your tax code.
2. If it’s incorrect, update your details through HMRC’s online portal or contact them directly.
3. Once corrected, HMRC will adjust your tax in the following months, or they’ll issue a refund.

2. You Changed Jobs Midway Through the Tax Year

When you change jobs, your new employer assigns you a tax code based on the assumption that you’ll be earning at the same rate for the full tax year. However, if:

• Your new job pays less than your previous one, you might have been taxed too much early in the year.
• You had a break between jobs, and your earnings for the year were lower than expected, but tax was deducted as if you had worked all year.

This can result in overpaying tax because PAYE doesn’t always account for variations in earnings until HMRC reviews your total income at the end of the tax year.

To resolve this:

1. Wait for a P800 tax calculation from HMRC after the tax year ends.
2. If you believe you overpaid before then, you can log into your Personal Tax Account and check your tax situation.

3. You Had More Than One Job at the Same Time

If you work two jobs simultaneously, HMRC assigns a tax code to each employer. The potential issue is:

• Your primary job gets your full Personal Allowance (e.g., £12,570 tax-free).
• Your second job is often put on a BR (Basic Rate) tax code, meaning all income from it is taxed at 20%, even if you haven’t used up your allowance.

To address this:

1. Check if you’re using your Personal Allowance correctly. You can ask HMRC to split your allowance between jobs.
2. If you find out you were overtaxed, claim a refund through HMRC’s online service.

4. You Stopped Working Before the End of the Tax Year

PAYE assumes you’ll work the full tax year at the same earnings level. If you:

• Quit your job partway through the tax year.
• Retired early.
• Took an extended unpaid leave.

Then too much tax might have been deducted because your employer assumed you’d be earning that same amount every month for 12 months.

To claim a refund:

• If you stop working, you can claim a tax refund before the tax year ends by filling out form P50 (Claim a Tax Refund).

5. You Were on Maternity Leave, Sick Pay, or Another Low-Pay Period

If you had a period of lower income due to:

• Maternity Leave or Paternity Leave.
• Sick Pay (Statutory Sick Pay – SSP).
• Unpaid Leave or Furlough (if applicable).

Your PAYE tax might not have adjusted correctly, and you could have paid tax on income below the taxable threshold.

To get your money back:

• HMRC will usually adjust your tax code automatically, but if you think you’ve overpaid, request a refund via your Personal Tax Account.

6. You Claimed Work Expenses but Didn’t Get Tax Relief

If you’ve paid for things like:

• Work uniforms, tools, or equipment.
• Professional subscriptions (e.g., union fees, membership fees for professional bodies).
• Work-related travel that wasn’t reimbursed (not commuting).

You might be eligible for tax relief, but this isn’t automatic. Many people overpay because they don’t claim these deductions.

To claim your tax relief:

1. Use HMRC’s online tool to claim back expenses here.
2. Claims can be backdated for up to 4 years, meaning you might get a larger refund than expected.

How to Claim Your Refund

So you think you might be owed a refund. Great! But how do you actually get your money? The process differs a bit depending on your employment status.

Employed and Paid via PAYE

If you’re employed and pay tax through the PAYE (Pay As You Earn) system, HMRC might automatically send you a P800 tax calculation if they realise you’ve overpaid. 

If not, you can log into your Personal Tax Account online and check your records. If a refund is due, you’ll either receive a cheque or be asked to provide bank details for a direct payment.

Claiming for Work-Related Expenses

If you’ve shelled out for work-related expenses like uniforms, tools, subscriptions, or mileage, you can claim tax relief online. 

HMRC will usually adjust your tax code so you pay less tax in the future, but they may also issue a refund for past years.

When You Can Expect Your Refund

Online claims through your Personal Tax Account are usually processed within 5 working days. If you receive a P800 from HMRC, it usually takes 4-6 weeks after they’ve processed it. Paper claims can take a bit longer.

You can claim a refund for overpaid tax for up to 4 tax years. So in 2025, for example, you could claim back to the 2020/21 tax year.

Confused? Contact a Tax Advisor

Taxes are undoubtedly complicated. If you’re unsure about anything, consider seeking advice from a qualified tax professional like us at Double Point. 

We can help ensure you’re claiming everything you’re entitled to and avoid any costly mistakes. This is particularly important if you have a complex tax situation, such as multiple income sources or international elements.

Our chartered accountants can assess your situation, help you claim your refund, and even provide advice on how to optimise your taxes going forward.

Whether you’re an employee, self-employed, or have a complex mix of income, we’re here to help. Get in touch with us today, and let’s work together to get you the refund you deserve!