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This information applies to England, Wales, Scotland and Northern Ireland
What is a tax rebate
A tax rebate is a refund of tax which has been overpaid. There are a number of reasons why tax may have been overpaid, including:-
- you start a new job and are taxed under an emergency code for a while
- your circumstances change, for example, you marry, form a civil partnership, reach retirement age or become a single parent
- HM Revenue and Customs sends the wrong tax code to your employer
- HM Revenue and Customs made an assessment, for example, for a self-employed person, which was too high
- you are not a taxpayer, but have had tax deducted from your building society or bank interest.
For more information, see Income tax.
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Rebates under PAYE
If you pay tax through PAYE you have your tax adjusted throughout the tax year, by your employer. If too much tax has been deducted, the tax office will send your employer a new tax code, which will enable your employer to pay the rebate through your wages or salary.
See Pay As You Earn - PAYE: common problems.
Rebates for unemployed people
If you become unemployed and claim jobseeker’s allowance, you will not immediately receive a tax rebate. A rebate will be paid either under PAYE if you go back to work, or at the end of the financial year, whichever is sooner. If you are on income support you will be treated in the same way.
For more details about how benefits are taxed, see Tax-exempt and taxable income.
Rebates following a death
An overpayment of income tax may arise following a death. HM Revenue and Customs should be informed of the death in writing as soon as possible and a copy of the death certificate should also be sent to the tax office. Special rules apply to the tax allowances if the person who has died was married or in a civil partnership. If a refund of tax is made, it is counted as part of the estate of the person who has died.
Rebates for strikers
If you are on strike, you will only be paid a rebate when you either leave the job or go back to work. The rebate will not be paid at the end of the financial year.
See Pay As You Earn - PAYE: common problems.
Leaving a job
If you leave work and do not claim social security benefits, you may be able to claim a rebate after four weeks of leaving work. Circumstances in which this may be possible include:-
- leaving the country permanently
- giving up work to care for a sick or elderly relative
- leaving work to go into full-time education
- retirement
- leaving work to care for a child.
See Pay As You Earn - PAYE: common problems.
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Time limits on claiming a tax rebate
A claim for a tax rebate can usually be made up to five years after 31 January, following the end of the tax year in which tax was overpaid. However, this time limit can be extended in cases where overpayment of tax occurred because of an error by HM Revenue and Customs or another government department, and where there is no dispute or doubt as to the facts.
For more details about what to do if the HM Revenue and Customs has made a mistake, see Help with tax problems.
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Interest on rebates
HM Revenue and Customs must pay interest on a tax rebate if the repayment is made after 31 January following the end of the tax year in which you overpaid the tax.
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