How does one qualify for an Income Tax claim?

Of course there are many different ways that one could be due an Income Tax repayment.

Repayments can be due from income that arises from a multitude of sources. If you have been taxed under PAYE (Pay as you Earn) where income tax has been deducted at source using perhaps an incorrect tax code this will usually mean that you are due an income tax refund.

Also if you have been paid under the CIS (Construction Industry Scheme) then tax will have been deducted against which you can claim expenses that you have incurred.

With earnings under PAYE it might be possible to claim business expenses, obviously depending on the type of work that you actually do.

One simple example is where you use a motor vehicle to carry out your duties.

The rates that can be claimed are as follows:-

For Motor cars and vans at a rate of 40p per mile on the first 10,000 business miles per annum can be paid or claimed and then in excess of 10,000 miles per annum at 25p per mile.

For Motor bikes the allowance is 24p per mile and for pedal cycles at 20p per mile.

You can also make a claim and be paid up to 5p per mile free of tax for each co-worker who travels with you as a passenger and of course this has to be on a business journey.

You cannot of course simply give a colleague a lift to work. If you have been re-imbursed but at a lower rate then you can claim the difference as a deduction.

Another example could be those that provide their own tools as is very common in some trades. These claims can be carried back for up to six tax years which can result in a substantial refund.

Another common way that an income tax repayment will arise is that if you depart from the UK and do not take up employment before the end of the tax year then very probably you will be entitled to a tax refund.

If you commenced a job part or mid way through a tax year and have been taxed on a month 1 basis then you will probably qualify for an income tax refund.

How this can arise is simply when people start work under PAYE for the first time. This can occur simply on a first job or perhaps when somebody first arrives to work in the UK.

When a psye tax code has been issued on a week 1 or a month 1 basis it does mean that the tax free part of the pay is calculated only on each monthly or weekly monthly payroll and is not taxed on an accumulative basis.

This means that if you started employment nine months into the Tax Year and had been taxed for every month on a month 1 basis then at the end of the tax year you would only have been able to use a small part of the personal allowances so these unused personal allowances would give rise to an income tax refund.

A normal code which is neither a month 1 nor a week 1 basis means that the tax free pay amount of the code is allowed to accumulate each month which means that over the year the correct tax would be deducted.

Obviously in these circumstances there probably would be no income tax repayment due. Usually the use of a week 1 or month 1 coding will mean that an income tax repayment may be due.

If you are due a refund it is possible to make a claim going back the last six tax years.

This six year time limit is not clear cut so if you have overpaid tax it must be claimed back no later than the 31 January five years after the end of the tax year (5 April) in which the overpayment was made.

So if one is due a repayment for 2005/6 which came to an end on 5th April 2006 the time limit for making the claim is 31st January 2012.

This means that in real terms the time limit is five years nine months. It has been claimed that “Tax does not have to be taxing” but that is in the opinion of those who set the taxes. The ordinary man and indeed even Accountants can find it confusing as it contains obtuse and complicated language.

To be able to make a claim for a repayment you will need some basic documentation. The documents that you need are quite straightforward. The form P45 for each of your employments and these documents would be handed to you when you left your employment assuming, of course, that you had left before the 31st March.

Assuming that you had not left before 31st March then you would have been handed a Form P60 from your employer at the tax year end.

If you do not have this paperwork then your tax agent may be able to obtain this either working from your pay slips or by getting an earnings statement from your employer.

In conclusion it is essential to check to see if you might be due a tax refund as about one third of tax payers are due a refund.