Receiving a tax refund can be a welcome financial boost, but many taxpayers don’t realise they may be entitled to more than they’re claiming. By understanding how the UK tax system works and what reliefs and allowances are available, you can maximise your tax refund and ensure you’re not leaving money with HMRC unnecessarily. This comprehensive guide explains the key ways to increase your refund, covering common deductions, allowances, and practical tips for getting your money back.
Understanding Tax Refunds
A tax refund occurs when you’ve paid more tax during the year than you actually owe. This can happen for several reasons: an incorrect tax code, overpayment through PAYE, or failure to claim certain allowances. HMRC’s systems usually identify overpayments, but it’s your responsibility to check your records and claim any refund due.
Check Your Tax Code
Your tax code determines how much tax is deducted from your income. An incorrect code can lead to overpayments. Check your payslip or HMRC’s Personal Tax Account for your current code. The standard code for 2024/25 is 1257L, but adjustments may apply if you receive benefits, have multiple jobs, or underpaid tax in the past.
If your tax code includes deductions that no longer apply—such as benefits you no longer receive—contact HMRC to update your details and request a refund of any overpaid tax.
Claim Work-Related Expenses
If you incur expenses necessary for your job that aren’t reimbursed by your employer, you may be entitled to tax relief. Common examples include:
- Professional subscriptions and union fees (if on HMRC’s approved list).
- Uniforms or protective clothing, including laundry costs.
- Tools or equipment required for your job.
- Travel costs (excluding ordinary commuting) between different workplaces or temporary assignments.
You can claim these expenses using HMRC’s online service, Form P87 (for claims under £2,500), or through your Self Assessment tax return if you’re self-employed or your claims are higher.
Marriage Allowance
If you’re married or in a civil partnership, and one partner earns below the Personal Allowance (£12,570 for 2024/25), you may be able to transfer £1,260 of their unused allowance to the higher-earning partner, reducing their tax bill by up to £252. This can also be backdated by up to four years if you were eligible but didn’t claim, giving you a significant refund.
Uniform Tax Rebate
If you’re required to wear a uniform or protective clothing at work and you’re responsible for washing or repairing it, you may be eligible for a uniform tax rebate. The standard flat-rate allowance is £60 (equating to £12 for basic-rate taxpayers), but some industries qualify for higher allowances. If you haven’t claimed before, you can backdate your claim for up to four tax years.
Pension Contributions
If you make pension contributions through a net pay arrangement, your tax relief is automatic. However, if you contribute to a personal pension plan or certain employer schemes, you may need to claim additional tax relief if you’re a higher- or additional-rate taxpayer. You can do this through your Self Assessment tax return or by contacting HMRC directly. Ensuring you claim this relief can increase your refund significantly.
Charitable Donations (Gift Aid)
Donations made under Gift Aid qualify for tax relief at your highest rate. For example, if you’re a higher-rate taxpayer and donate £100, the charity claims £25 from HMRC, and you can claim an extra £25 through your tax return. If you haven’t claimed this relief in previous years, you can include it in your Self Assessment return or write to HMRC to request a refund.
Savings and Investment Income
If you have savings interest or dividend income and paid tax at source, you may be due a refund if your total taxable income is within your Personal Savings Allowance (£1,000 for basic-rate taxpayers) or Dividend Allowance (£500 for 2024/25). Complete a Self Assessment tax return or use Form R40 to claim back tax paid on savings interest if you’re not required to file a tax return otherwise.
Emergency Tax on Pension Withdrawals
If you’ve taken a lump sum from your pension and were taxed using an emergency tax code, you may have overpaid. You can claim a refund using:
- Form P55 (if you haven’t taken your entire pension).
- Form P50Z (if you’ve taken your entire pension and aren’t working).
- Form P53Z (if you’ve taken your entire pension but are still working).
These forms are available on HMRC’s website and can be completed online or by post.
Time Limits for Claims
You can claim overpaid tax for up to four tax years from the end of the tax year in which the overpayment arose. For example, claims for the 2020/21 tax year (which ended 5 April 2021) must be made by 5 April 2025. Make sure to submit your claim before this deadline to avoid losing your refund.
How to Claim Your Refund
Depending on your circumstances, you can claim a refund by:
- Completing a Self Assessment tax return (if required).
- Using HMRC’s online services via your Personal Tax Account.
- Submitting Form P87 for employment-related expenses.
- Using Form R40 for overpaid tax on savings income.
HMRC usually pays refunds directly into your bank account, but you can request a cheque if preferred. Refunds are typically processed within a few weeks, though complex cases may take longer.
Record-Keeping and Evidence
Always keep receipts, payslips, pension statements, and other relevant documentation to support your claim. HMRC may request this evidence, especially for larger refunds or unusual claims.
Practical Example
Emily earns £35,000 and pays £250 annually to a professional body for membership fees. She also wears a uniform at work that she washes herself. Emily claims tax relief on both expenses: £250 for her subscription and £60 for uniform maintenance. She also realises she’s eligible for Marriage Allowance and claims this relief too, receiving a total refund of £362 for the year. Emily submits her claim online using HMRC’s Personal Tax Account and receives her refund within four weeks.
Tips to Maximise Your Refund
- Review Your Tax Code Regularly: Ensure it reflects your current circumstances.
- Claim All Allowances and Reliefs: Don’t overlook deductions like Marriage Allowance, uniform allowances, and pension tax relief.
- Check for Backdated Claims: If you’ve missed a claim in previous years, act before the four-year deadline passes.
- Use the Right Forms: Choose the correct claim process for your situation to avoid delays.
- Seek Professional Advice: If your situation is complex, a tax adviser can help you identify all potential refunds and ensure you comply with HMRC rules.
Conclusion
Maximising your UK tax refund isn’t just about filling in forms—it’s about understanding the tax system, knowing your entitlements, and taking proactive steps to claim what’s rightfully yours. From checking your tax code to claiming work-related expenses, Marriage Allowance, pension contributions, and more, every pound reclaimed is money back in your pocket. Stay informed, keep good records, and don’t leave your money with HMRC when it could be helping your finances instead.
