Have you been on Maternity Leave – you may be due a Tax Refund

If you are employed or receiving a pension in the UK, your income is usually taxed through the Pay as You Earn (PAYE) system. While this is designed to collect the right amount of tax throughout the year, it is not uncommon to pay too much.

In many cases, overpayments happen simply because of how PAYE operates, and no one is at fault. If this happens, you may be entitled to a tax refund.

There are many reasons why you may have paid too much tax but it is usually due to a change of circumstances such as a significant reduction in income due to:

• Switching from full-time to part-time work
• Being off work on maternity leave
• Stopping work altogether during the tax year

Other common reasons can be:

• Your employer used the wrong tax code or you were on an emergency tax code.
• You had multiple PAYE jobs or pensions at the same time.
• You worked casually or as a student during holiday periods.
• Other taxable income reduced your tax code.

In many of these situations, you may only have received part of your tax-free personal allowance when you were entitled to the full amount.

How will I know if I am due a Tax refund

At the end of each tax year, HMRC may review your income and tax records and issue a P800 tax calculation. This shows whether you have underpaid or overpaid tax. However, mistakes can happen, so always check that the figures are correct.

Until May 2024, many repayments were sent automatically. However, for most PAYE customers, HMRC no longer issue tax refunds automatically by cheque, you usually need to claim it.

Last year, over 730,000 refunds went unclaimed, with the average refund worth £855. You still may be entitled to a refund for past years but time limits do apply, so do not delay.

The quickest and easiest way to check if you are due a refund, or to start the process is through the HMRC app.

Further HMRC information on tax overpayments and underpayments is available here.