Have you paid too much tax during the pandemic?

Do your calculations

Get your 2020 P60 or your last payslip (March 2020) and note down your total income (YTD) and what you’ve paid in tax. Ignore deductions like pensions, national insurance and student debt repayments – for the purposes of this you need to only review the tax.

• Look at your tax code. Typically, it will be 1250L for employees. This gives you a personal allowance of £12,500 for the year. If you’ve not earned that this year, then any tax you’ve paid is an overpayment.
• Any money you’ve been paid between £12,501 and £50,000 you should pay tax on at 20%. So, for example, if you earned £15,000 since April you should only have paid a maximum of £500 (but see below). Yet the tax you’ve paid is probably in the region of £2,000 so you would be due a refund of at least £1,500.
• You can also claim for work expenses. If you’ve been working from home, for example, you’re allowed to claim towards your office costs and utilities. Typically, you can claim around a third of the cost of your household expenses. If you’ve had to buy PPE equipment, tools or a uniform, you can claim that too. These expenses are, in effect, added to your personal allowance, so will reduce your tax burden still further. So if your expenses since April come to £2,500 and your total income was £15,000, all the tax you’ve paid this year is owed to you. (i.e. £15,000 minus £2,500 expenses = £12,500).
• Write all your expenses down in a list and categorise them.

Claiming it back

HMRC will probably automatically give you a tax refund next year but won’t automatically give you a tax refund on your expenses, plus most people need the money now. If that’s you, either employ someone to claim it back for you or get in contact with HMRC yourself.

To claim it yourself, visit www.gov.uk/claim-tax-refund and the site will take you through a series of questions. Unhelpfully the form has a “one size fits” all approach so covers all tax refunds claims, not just income tax.

• Do the calculations (see above) first, as you will be asked about them
• Make sure you have all the information to hand
• Stick to the facts – there are huge penalties (fines or even imprisonment) if you give false information
• When you call, make sure you have plenty of time. The phone lines at HMRC can be very busy so you should expect to wait around an hour on hold before you get to speak to someone.

If you’re finding it difficult, get professional help. It could save you thousands in either a fine or a missed refund.