People could be owed thousands of pounds in back-dated tax and the average payment could be as high as £2,500. If you have never applied for a tax refund, you can backdate an application four years.
Any money you have overpaid in previous tax years is returned to you as a lump sum by HMRC. According to tax experts, the average payout is around £2,500.
If you know which tax code you belong to, you can use a free online tax code calculator. MoneySavingExpert has also just updated its calculator which you can consult here.
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One of the most common ways this can happen is if you’ve accidentally been placed on the wrong tax code, which can happen if you’ve just changed jobs. Your tax code is made up of numbers and letters and is used by HMRC to determine how much tax you have to pay each month.
If you only have one employer and earn less than £100,000 your code will probably be 1257L. The quickest way to check your tax code is to check your payslip, your P45 or P60 form. If you have lost track of these, the Gov.uk website also has a dedicated webpage where you can view your tax code.
Tax overpaid in previous tax years is often returned in the form of cash. As with the current tax year, your tax code is normally adjusted so that you pay less tax, The Mirror reports.
The UK tax year begins on April 6 of each year and ends on April 5 of the following year. Of course, the amount you could actually recover from the taxman depends on the amount of tax owed to you.
But with recession looming and inflation soaring, any lump sum is welcome. Inflation hit a new 40-year high of 9% last month and national insurance contributions have just risen 1.25 percentage points from 12% to 13%.
If you think you have paid too much you can contact HMRC on 0300 200 3300. You can also speak to an advisor online via their live chat service. HMRC will then contact your employer to correct your tax code, and you will recover any tax due on your next payslip.
If you have been paying too much tax for some time, you can claim up to four additional years – so as far back as tax year 2018/19. The bad news is that if you underpaid, you will have to refund your taxes. It’s better to sort this out sooner rather than later.