| How does one qualify for a UK Income Tax refund? | | | | of the pay is calculated only on each monthly or |
| Of course there are many different ways that one | | | | weekly monthly payroll and is not taxed on an |
| could be due an Income Tax repayment. | | | | accumulative basis. |
| Refunds can be due from income that arises from a | | | | This means that if you started nine months into the |
| mixture of sources. If you have been taxed under | | | | Tax Year and had been taxed for every month on a |
| PAYE (Pay as you Earn) where income tax has been | | | | month 1 basis then at the end of the tax year you |
| deducted at source using perhaps an incorrect tax | | | | would only have been able to use a small part of the |
| code this will usually mean that you are due an income | | | | personal allowances so these unused personal |
| tax refund. | | | | allowances would give rise to an income tax refund. |
| Also if you have been paid under the CIS | | | | A normal code which is neither a month 1 nor a week |
| (Construction Industry Scheme) then tax will have | | | | 1 basis means that the tax free pay amount of the |
| been deducted against which you can make a claim | | | | code is allowed to build up each month which means |
| for expenses that you have incurred. | | | | that over the year the correct tax would be deducted. |
| With earnings under PAYE it might be possible to claim | | | | Obviously in these circumstances there probably would |
| business expenses, obviously depending on the type | | | | be no income tax repayment due. Usually the use of a |
| of work that you actually do. One simple example is | | | | week 1 or month 1 coding will mean that an income tax |
| where you use a motor vehicle to carry out your | | | | repayment may be due. |
| duties. | | | | If you are due a repayment it is possible to make a |
| The rates that can be claimed are as follows:- | | | | claim going back for the last six tax years. This six |
| For Motor cars and vans at a rate of 40p per mile on | | | | year time limit is not so straightforward so if you have |
| the first 10,000 business miles per annum can be paid | | | | overpaid tax it must be claimed back no later than the |
| or claimed and then in excess of 10,000 miles per | | | | 31 January five years after the end of the tax year (5 |
| annum at 25p per mile. | | | | April) in which the overpayment was made. |
| For Motor bikes the allowance is 24p per mile and for | | | | So if one is due a repayment for 2005/6 which came |
| pedal cycles at 20p per mile. You can also make a | | | | to an end on 5th April 2006 the time limit for making |
| claim and be paid up to 5p per mile free of tax for | | | | the claim will be 31st January 2012. |
| each co-worker who travels with you as a passenger | | | | This means that in real terms the time limit is five years |
| and of course this has to be on a business journey. | | | | nine months. It has been claimed that "Tax does not |
| You cannot simply give a colleague a lift home or to | | | | have to be taxing" but that is in the opinion of those |
| work. If you have been reimbursed but at a lower rate | | | | who set the taxes. The ordinary man and indeed even |
| then you can claim the difference as a deduction. | | | | Accountants can find it confusing as it contains obtuse |
| Another example could be those that provide their | | | | and complicated language. |
| own tools as is very common in some trades. These | | | | To be able to make a claim for a refund you will need |
| claims can be carried back for up to six tax years | | | | some basic documentation. The documents that you |
| which can result in a substantial refund. | | | | need are straightforward. The form P45 for each of |
| Another common way that an income tax repayment | | | | your employments and these documents would be |
| will arise is that if you depart from the UK and do not | | | | handed to you when you left your employment |
| take up employment before the end of the tax year | | | | assuming, of course, that you had left before the 31st |
| then very probably you will be entitled to a tax refund. | | | | March. |
| If you started a job part or mid way through a tax | | | | Assuming that you had not left before 31st March then |
| year and have been taxed on a month 1 basis then | | | | you would have been handed a Form P60 from your |
| you will probably qualify for an income tax refund. How | | | | employer at the tax year end. If you do not have this |
| this can arise is simply when people start work under | | | | paperwork to hand then your tax agent may be able |
| PAYE for the first time. This can occur simply on a | | | | to obtain this either working from your pay slips or by |
| first job or perhaps when somebody first arrives to | | | | getting an earnings statement from your employer. |
| work in the UK. | | | | In conclusion it is essential to check to see if you might |
| When a psye tax code has been issued on a week 1 | | | | be due a tax refund as about one third of tax payers |
| or a month 1 basis it does mean that the tax free part | | | | are due a refund. |