Starting a new job can be nothing short of overwhelming, and in the stress of everything, it is easy to forget to hand in the p45 you would have been given from your previous employer – particularly if you were not asked for it to begin with. This p45 is a form that is given to any employee at the end of employment and has details of how much tax they have paid throughout the year, the tax code that they were on and their National Insurance number. It is important that this is handed over when you begin a new term of employment as otherwise your new employer will have no previous details of your tax payments and will have no choice but to put you on an emergency tax code. If you are registered with an emergency tax code, you will be paying tax on all of your income above the Basic Personal Allowance (£11,000). This tax year (2015/16) the emergency tax code is 1060L and so if you see this on your payslip after suspecting you are overpaying your tax, you need to get in touch with HMRC and alert your employer.
In an ideal world, you will receive one payslip, alert HMRC to the changes that need to be made to your tax code, settle it with your employer and your next payslip will display your new code, and you will be compensated for any money that was wrongly taken from you the first time around. HOWEVER, this is not an ideal world and HMRC are unfortunately notorious for taking a long time to do pretty much anything (they have a fair few issues to deal with, in all fairness) and whilst your tax code is in the process of being amended, you are losing a significant cut of your wages to the taxman and you are nothing other than skint.
The first thing that you need to do is to change your tax code. To do this, you will need to contact your previous employer and ask for your p45 to be generated (if it hasn’t already). You will then need to hand this to your employer and get in touch with HMRC. You new tax code is most likely to be sent to you in a PAYE coding notice and HMRC will alert your employer. When your tax code has finally changed, you will find that you are owed a significant amount of money by HMRC (depending on how long you have been on the wrong tax code) and it is time to claim that money back. The tax year runs from the 6th April to the following 5th April and at the end of this, you will be entitled to any overpayment of tax within this period, back. It is not just tax from the year just ending that you can claim back, you can also claim back tax you are owed from as early as 2012/13. If you are unsure at this point whether or not your tax code is wrong then it is easily checked on the Government website using their calculator. The amount of tax that you pay depends on your salary and so codes will be different for certain people. The regular code for this tax year is 1100 and this will appear on most people’s pay slips.
How to claim your tax back
- First things first is to work out how much tax you think you are owed (even if it’s only a rough amount) so you know you have been paid all that you are owed when you receive your rebate. You can do this by working out how much you would have paid should you have been on the right tax code. The extra will be how much you need to claim back.
- If you are owed a tax rebate you might be sent a p800 by HMRC which you will receive by the end of September (the following tax year) . This is an assessment of how much tax that you have paid over the year. There may be a message on your p800 that says you can claim your tax back online. If this is the case, you can follow the instructions to apply for your tax back. If you do not do this within 45 days of receiving the p800, HMRC will send you a cheque and you can claim your tax back this way instead. You will receive the cheque within 14 days.
- If you have not received a p800 but are sure that you are owed tax back, you can call HMRC directly and discuss the matter over the phone. For this, you will need; your National Insurance number, details of your previous job or state benefits that you were getting at the time as well as your p45 if you now have one.
- After you have spoken to HMRC they will then need to get back in contact with you. They will either send you a refund directly into your bank or by cheque if they agree that you are owed the money. In some cases, they may call you again asking for more information. Alternatively, they will call you to say why they are not refunding you.