If you have paid too much tax to HM Revenue & Customs, you may be due a refund. This is more common than many business owners realise. Overpayments happen for several reasons: a change in employment, working from home, claiming job expenses, or a redundancy payment that pushed you into a higher tax bracket temporarily.
This guide explains the practical steps to claim your money back. We cover the different routes depending on how you pay tax, what HMRC will ask for, and the warning signs of tax refund scams.
How Do You Know If You Have Overpaid Tax?
The most reliable way to check is through your Personal Tax Account on the gov.uk website. You can use this service to see how much Income Tax you paid last year, provided you did not pay any of that tax through Self Assessment [1]. If you file a Self Assessment return, your tax position is reconciled through that process instead.
HMRC will send you a tax calculation letter, known as a P800, if they believe you have overpaid or underpaid. The P800 will tell you the amount and, in many cases, allow you to claim the refund online [1]. You can also use the HMRC app to check your tax position for previous years [1].
If you cannot create a Personal Tax Account, contact HMRC directly for advice [1]. You can also estimate your Income Tax for previous years without signing in, though this is less precise [1].
What Can You Claim a Refund For?
HMRC's online tool lists the most common reasons for overpayment. You may have paid too much tax on pay from a job, a pension, a redundancy payment, UK income if you live abroad, interest from savings or Payment Protection Insurance (PPI), income from a life or pension annuity, or foreign income [2].
You can also claim for job expenses. These include working from home costs, fuel, work clothing, and tools [2]. If you are an employee and your employer did not reimburse you for these, you can claim tax relief on the amount you spent.
For example, if you spent £60 on specialist work boots and your employer did not pay you back, you can claim tax relief on that £60. At the basic rate of 20%, that means a refund of £12. It is not a huge sum, but it adds up across multiple claims.
One important point: you cannot claim a refund directly through the HMRC tool. The tool tells you what you need to do next, which is usually to submit a claim through your Personal Tax Account or by post [2].
The P800 Process: What to Expect
If HMRC sends you a P800, read it carefully. The letter will state whether you are due a refund or owe tax. If you are due a refund and the letter says you can claim online, you can do so through your Personal Tax Account [1].
HMRC will typically process the refund within 5 to 10 working days if you claim online. Postal claims take longer, often 6 to 8 weeks. If you have already claimed a tax refund, you can check the expected reply time on the gov.uk website [2].
Do not assume a P800 is correct. Check the figures against your own records. If something does not match, contact HMRC before accepting the calculation.
Self Assessment and Tax Refunds
If you file a Self Assessment tax return, your refund is handled differently. You do not receive a P800. Instead, your tax position is reconciled when you submit your return. If you have overpaid, HMRC will issue a refund after the return is processed.
You can also adjust your tax payments on account if your income has dropped. This prevents you from overpaying in the first place. Many sole traders and contractors miss this step and end up waiting for a refund later.
As ICAEW qualified accountants, we see this regularly with clients who have had a quiet year. If your 2024/25 income was significantly lower than 2023/24, you can apply to reduce your payments on account for 2025/26. This keeps your cash in your business rather than sitting with HMRC.
For more on Self Assessment, see our sole trader and self employment blog.
Employer Deductions: What Is and Is Not Allowed
By law, under the Employment Rights Act 1996, an employer can only make a deduction from wages if it is required by law, such as tax and National Insurance [3]. If you are an employee or worker, your employer must deduct tax and NI and pass it to HMRC [3].
Employers cannot deduct from tips, service charges, or gratuities that they control or have significant influence over, except for the usual tax and NI deductions [3]. In retail, an employer can take a maximum of 10% of gross pay for till shortages or stock shortfalls [3].
If you believe your employer has made an incorrect deduction, you should raise it with them first. If that does not resolve it, you can contact HMRC or Acas for advice.
Pension Lump Sums and Tax Refunds
Taking a Pension Commencement Lump Sum (PCLS), commonly known as a tax-free lump sum, does not trigger cancellation rights under FCA rules [4]. However, if you take a PCLS and later wish to return the money to your pension, the tax implications are complex.
HMRC published newsletter 173 on 25 September 2025, which explains how tax legislation applies to tax-free lump sums and the tax implications when lump sums are returned to pensions [4]. If you are considering this, speak to a qualified financial adviser first. The tax charge can be significant.
Warning: Tax Avoidance Schemes
If someone offers to get you a tax refund quickly or promises a refund that seems too good to be true, it is likely a tax avoidance scheme. Jonathan Smith, Director of Counter Avoidance at HMRC, states that these schemes rarely work as promoters claim, and users can end up with large tax bills, sometimes paying far more than the tax they tried to avoid, including interest and penalties [5].
Around 40% of dental professionals surveyed in 2020 were self-employed or working as a freelancer or locum [5]. That is around 46,000 dental professionals [5]. This group is a common target for avoidance scheme promoters. The same applies to contractors in IT, construction, and consulting.
Stick to legitimate claims. If you are unsure, ask a qualified accountant before signing anything.
How to Claim: Step by Step
Here is the practical process for most refund claims:
- Check your tax position through your Personal Tax Account or the HMRC app [1].
- If you receive a P800, review it and claim online if eligible [1].
- If you file Self Assessment, submit your return and any overpayment will be refunded after processing.
- For job expenses, claim through your Personal Tax Account or by completing the relevant section of your Self Assessment return.
- Keep records of your expenses. HMRC may ask for evidence.
- If you live abroad and have UK income, use the non-resident landlord scheme or file a Self Assessment return [6].
For a full breakdown of the services we offer, see our services page. If you need help with a specific claim, contact us.
Common Mistakes to Avoid
Do not assume a P800 is final. Check it. If you disagree, you have the right to challenge it.
Do not use a third-party refund company that charges a percentage of your refund. You can do it yourself for free through HMRC.
Do not ignore a P800 that says you owe tax. Interest and penalties will accrue.
Do not claim expenses you did not actually incur. HMRC can audit claims going back several years.
For more on staying compliant, see our bookkeeping and compliance blog.
When to Speak to an Accountant
If your tax affairs are straightforward, you can handle a refund claim yourself. But if you have multiple income sources, foreign income, or complex expenses, it is worth getting professional advice. The cost of an accountant is often less than the tax you might miss or the penalties from a mistake.
Our team can help you review your tax position and ensure you are claiming everything you are entitled to. We also have a range of calculators to help you estimate your tax liability.
If your turnover crossed the VAT threshold in the last 30 days, register inside the 30-day window. If you are considering incorporating, read our incorporation guide first.
Sources
- gov.uk: Check how much Income Tax you paid last year - GOV.UK
- aka.hmrc.gov.uk: Check how to claim a tax refund - GOV.UK
- acas.org.uk: Making and checking deductions - Deductions from pay and wages
- fca.org.uk: Tax-free pension lump sums and cancellation rights - FCA
- gdc-uk.org: Tax avoidance: don't get caught out - General Dental Council
- taxscape.deloitte.com: Non-resident landlords scheme - TaxScape | Deloitte