If you are struggling financially due to the COVID-19 pandemic, it’s worth checking if you are due a tax refund. Whether you started a new business that has struggled to continue since the outbreak, have been affected by government-mandated closures of non-essential businesses, are no longer employed due to COVID-19 or are not eligible for furlough, a tax refund might be the windfall that you need.
How much you will be refunded if you are eligible for a tax refund will depend on whether you have overpaid any tax in the last financial year, and if so, how much. If you could benefit from a little extra money in your bank account right now, or simply want to make sure that you get your money back, here’s what you need to know about tax refunds.
Who is entitled to a tax refund?
There are various reasons why you might be entitled to a tax refund. Some of the most common reasons include an incorrect tax code, an emergency tax code issued when you started a new job, or if you are self-employed and your circumstances have changed. For example, if you are no longer making as much profit as a self-employed worker due to COVID-19, your payments on account are likely too high and you might have paid too much tax if you have not claimed to have them reduced. You may also be eligible for a tax refund if you have two jobs and your second employer automatically deducts tax at the basic rate, meaning that you will not get the full benefit of your tax-free personal allowance.
Where can I check if I’m entitled to a tax refund?
If you believe that you might be owed a tax refund, you should first get in touch with HMRC. You will need to give your name and address. If you are self-employed, have your unique taxpayer reference code to hand. You can also check your tax refund status on the gov.uk website. You can do this by filling out a simple questionnaire that will help you assess whether or not you have paid too much tax from a current or previous job, redundancy payments, pension payments or a self-assessment tax return.
Tax refund scams to we aware of
Online scams and phishing attacks are on the rise yet again due to COVID-19, with cybercriminals preying on those who are out of pocket due to the current crisis. If you have received an email seemingly from HMRC that asks you to enter your details to claim your tax refund, it can be all too easy to fill out the required details, submit the form and wait for your money to arrive – but it won’t. This is a very common scam designed to steal your personal information and while most of us are familiar with phishing emails, they are becoming more and more sophisticated and well-designed, making the scam even harder to spot.
Remember that HMRC will never send you an email or a text message asking you to do a tax refund online; they will contact you through the post. You can organise a tax refund online via the website address provided on a letter called a P800 from HMRC to confirm your refund. Chartered accountants Goodman Jones have information on their blog about common tax refund scams to watch out for, and how to safely claim your tax refund from HMRC. Goodman Jones can also help you if you suspect that you have paid too much self-employment tax or need further assistance in getting your refund.
Can you speed the refund up?
Ultimately, you’ll need to wait for HMRC to issue your refund, which typically takes around eight to twelve weeks after your application. However, there are a few things that you can do to help the process along. Make sure that you have all the appropriate information to hand, including your National Insurance Number and Unique Taxpayer Reference Code if you are self-employed. Try and avoid submitting your tax refund application during the busiest times of the year for HMRC, such as January and July during the self-assessment deadline periods. You can usually expect smaller tax refunds to be quicker to process, but will typically wait longer if you are owed a large amount of overpaid tax back. You can also speed up the process by asking HMRC to pay you directly by bank transfer, which usually takes up to five working days from your refund being authorised.
If you’ve overpaid tax in the past financial year for any reason, getting it back may be just what you need to help you get through the COVID-19 crisis financially. Don’t wait for HMRC to realise their mistake; be proactive about getting your overpaid tax back to ensure that it lands in your account as soon as possible.
