What is PAYE?
Paying too much tax can be a real nuisance, especially when you don't understand the Pay As You Earn (PAYE) rule. The truth is, it's quite common for taxpayers to pay too much tax due to issues like having an incorrect personal allowance or being on the wrong tax code. The standard code, if you live in England is 1257L, for Scotland this is S1257L, for Wales it`s C1257L. For more about tax code, please check our comprehensive “What`s a tax code” guide here
In 2023/2024, the personal allowance will be £12,570 so if you earn more than this in a year, you'll be eligible to pay as you earn. But what happens if you've paid too much tax? You could find yourself with an unexpectedly large bill at the end of the year – or worse – an unexpected surplus from HMRC.
How do I know if I have paid too much tax?
The first thing to do is determine if you've paid too much tax. In most cases, the HMRC will not automatically refund any overpaid tax – it's down to you to spot and report any discrepancies. The best way to determine whether you have paid too much in taxes is to look carefully at your payslips, check your payroll tax reports, and analyse the amount of tax that was taken from each paycheck.
If you find that you've paid too much tax, don't panic – it's relatively straightforward to reclaim this money. You can claim a refund by filling out an HMRC form P50 or contacting your local Tax Office directly. Whichever method you choose, it's important to provide as much detail as possible and ensure that all the information is accurate.
How do I reclaim if I have paid too much tax?
If you've found that you've overpaid your taxes, then don't worry – it can be relatively straightforward to reclaim this money. The most efficient way to reclaim overpaid taxes is to fill out an HMRC form P50. This form will require you to provide details of your income and personal allowance, as well as the number of weeks that you have been working in the tax year. Once you've completed this form, then submit it to HMRC with any supporting evidence that can help to prove that you have paid too much tax.
In some cases, it may be more appropriate to contact your local Tax Office directly in order to apply for a refund. Whichever avenue you choose, always ensure that all the information is accurate and provides as much detail as possible.
Conclusion
Paying too much tax is unfortunately quite common. However, the good news is that it's relatively straightforward to reclaim any funds overpaid in taxes. The best way to determine if you have paid too much tax is by carefully analysing your payslips and payroll tax reports. If this reveals discrepancies then HMRC form P50 or contacting your local Tax Office directly can help to reclaim any overpaid taxes. It's important that all the information is accurate and supporting evidence is provided in order for your refund request to be successful.
