A tax rebate is a refund on any overpayment of tax that you might have paid this year or in previous years. You usually have four years from the end of the tax year to claim a tax refund, although if you complete a self-assessment you only have 12 months from the tax return deadline to amend a tax return, so it is better to do this as soon as you think you might have paid too much tax.
When You Might Have Paid Too Much
There are a number of circumstances when you might find you have paid too much tax. The most common example is if you have started a new job and not submitted your P45 or a P46, and so have been paying a basic rate of tax rather than the tax applicable to your tax code. This will often be picked up and rectified as soon as you have submitted one of the above forms, but in the event that it isn’t, you can contact HMRC who will arrange for a refund to be paid.
If you’re in regular employment, a tax rebate will usually be paid to you in your wages.
It is also common for those who complete self-assessment to pay too much tax, often because they’ve miscalculated earnings or inflated an estimate so that they don’t end up paying too little. If you complete self-assessment and receive a tax rebate, this can be paid into your bank, sent to you via cheque, or held in your self-assessment account so your tax bill is reduced next time.
Paying the Right Tax
If you believe you have paid too much tax, it is better to take action immediately, so that you can receive your refund at the earliest opportunity and not have to dig out old records or potentially be left out of pocket in the long-term.