Tax refunds

Student employees are often due a tax refund. This is the result of the way the PAYE system of tax collection works. Each tax year you are allowed a certain amount of tax free income. This amount is called your personal allowance.

           • Why you might pay too much tax
           • Leaving employment during a tax year
           • If you are working at the end of a tax year

Why you might pay too much tax
The PAYE system gives you your tax free personal allowance evenly throughout the tax year. For example, if you are paid monthly, you will receive 1/12 of the personal allowance per month.

If you leave employment part way through the tax year you may not have had the full benefit of your personal allowance. As a result, you might have paid too much income tax. Normally you will have used most of your tax free personal allowance if you have been employed all year.

Even if you are working for the whole of a tax year, you may still pay the wrong amount of tax. This is because your tax code might be wrong. The tax code used for your employment shows the amount of tax free pay you have been allowed (see our section on income tax tax to learn how tax codes work). If the tax code is incorrect, you will pay the wrong amount of tax. There is a particular risk of paying too much tax if you have more than one part-time job – http://taxaid.org.uk/situations/employee/paye-with-two-jobspensions for details.

Leaving employment during a tax year
If you leave work before 5 April, you should be given a form P45. This tax form shows the amount you earned and the tax you paid while working. You will need this form to claim a refund, to complete a tax return or to renewal or make a tax credit claim.

If you stop working before the end of a tax year you can use a form P50 to claim tax back from HM Revenue & and Customs. (You cannot use form P50 if you are claiming Jobseeker’s Allowance or taxable Incapacity Benefit, or if you expect to be working again within four weeks. If you are claiming benefits the Jobcentre Plus will normally process a tax refund at the end of the tax year, or when your claim ends – if this is sooner.)

If you think you may be due a tax refund, you should contact HMRC at an enquiry centre  or your employer’s tax office.

If you are working at the end of a tax year
If you are employed at the end of the tax year your employer should give you a P60 form. If you have been working all year in one job, then the P60 will cover that single job. If you have changed jobs during the tax year, the form should include details of earlier employments as well. If you have more than one job at the end of the tax year, you should receive a separate P60 form for each job. If your P60 form has a tax code of BR or a Week 1 / Month 1 code, you should check your tax position carefully, and take advice as you may have overpaid tax.

You can then check if you have paid too much tax – and what your refund might be – by using the tax calculator here.

To claim a refund, call HMRC or write with your P60 (keep a copy, and a copy of your letter). You will need to give HMRC information about any other income you had in the year, or state that this was your only income. The employer’s tax reference on your P60 will show you which tax office to contact. Use the Find a tax office page on HMRC’s website to get the contact details.