Does HMRC owe you some money?

When it comes to making the most of your money, it’s important to make sure you’re not paying more tax than you need to and that you’re reclaiming any tax refund due.

Here are four common reasons why you may be due a tax rebate:

1. Pension contributions

One of the big benefits of paying into a pension is tax relief. For every £80 you pay in, the Government add another £20. If you pay 40% Income Tax you can claim back up to another £20, with those within the 45% tax bracket able to claim back up to an extra £25.

While many employees paying into their employer’s pension receive the extra tax benefit automatically, the self-employed and those paying into their own pension will need to claim it back from HMRC through their annual tax return. If you haven’t been doing this, the good news is you can back date your claim for up to four years.

How do I claim a tax refund? You can contact HMRC direct quoting your national insurance number and details of your pension contributions.

2. Inheritance Tax refunds

Inheritance Tax (IHT) is determined by the value of an individual's assets when they die. The tax is usually payable within six months. If the executors sell shares or other qualifying investments within 12 months of the death and the value has fallen, they can substitute the sale price for the value at death and reclaim the IHT paid on the difference.

IHT can also be reclaimed on houses where the value falls and the executors sell within four years of the death.

The claims must include all shares or properties sold by the executor. If some of the values have risen since the date of death, this will reduce the amount that can be reclaimed.

How do I claim an Inheritance Tax refund? The sale of the asset and the claim must be made by the executors of the estate. If you’re making a claim for shares or investments that have fallen in value, use HMRC form IHT35, and if it’s for property, use HMRC form IHT38.  

3. Gifts to charity

Lots of people give generously to charity, but many 40% taxpayers, particularly those paid through PAYE forget to reclaim the tax rebate due on their donations.

If the charity you donate to makes a Gift Aid claim, it gives them an extra £25 for every £100 you donate. If you are a higher rate taxpayer, you can then claim back 20% of the total i.e. £25.

Giving money to charity via Gift Aid can have other positive outcomes, such as a reduced liability for the Child Benefit Tax charge or if it takes your total ‘Adjusted income’ below £50,270 it can give entitlement to the married couples allowance and increase the personal savings allowance from £500 to £1,000.

How do I claim a refund? When donating it’s important to complete a Gift Aid Declaration, provided by the charity. If you haven’t included the donation on your tax return, you can contact HMRC directly, quoting your national insurance number and details of your charity donations.

4. Marriage allowance refund

In the current tax year, most people can receive income of £12,570 before they pay tax. If your income is below this figure, you can transfer up to £1,260 of this tax-free allowance to your spouse or civil partner, provided they have an income below £50,270. This will mean they can save up to £252.

If you haven’t been claiming this allowance and you’ve been entitled to it, you can backdate your claim to the 2020/21 tax year, which could leave your family up to £1,258 better off.  

How do I claim a refund? You can apply online at www.gov.uk/apply-marriage-allowance or call 0300 200 3300.

What next?

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