| There are many ways that you can be entitled to a | | | | How this arises is as follows: |
| Tax refund in the UK. On average about one in three | | | | You start your employment part way through the Tax |
| people on PAYE are entitled to a refund but are not | | | | Year and are on an emergency code or even worse |
| aware of it. | | | | an OT code. An emergency code means that you |
| It is estimated that some where between a third and a | | | | would not be given your full personal allowances in the |
| quarter of the UK PAYE employees are entitled to a | | | | Tax Year. An OT code would mean that you would |
| tax refund. Usually these refunds can amount to some | | | | be given no personal allowances at all and would have |
| where between 750 and 1,250. | | | | your income taxed at basic rate. |
| What is even more amazing is that the majority of | | | | You leave the UK part way through the Tax Year |
| these people have no idea that they are actually due a | | | | again you would not have been given your full personal |
| tax refund. Why should they be aware? After all they | | | | allowances in the tax year |
| receive a computer generated pay slip so it appears | | | | A classic example could be some one who starts |
| to be correct. Of course often it is not and some thing | | | | halfway through one tax year and then leaves the UK |
| like 25% of payslips are wrong. | | | | in the second tax year.. |
| This happens as the PAYE Income Tax system is | | | | Or where some one leaves the UK part way through |
| unable to make any real intelligent conclusions as it is | | | | a tax year and then comes back part way through |
| solely dependent on the information that it receives. | | | | the following year usually to be taxed on an |
| After all it is a massive and complex system and | | | | emergency basis. Quite often they will be entitled to a |
| works very well for the average employee. | | | | UK tax refund for the year when they left the Country |
| Where it is often incorrect is that it is not fed the | | | | and a refund for the tax paid in the year when they |
| correct data in the first place. That is like a computer | | | | returned to the UK. |
| system if you input garbage you get garbage as your | | | | This can often happen with students who work |
| output it is simple as that. Where it often goes wrong | | | | outside their term time and are very often due an |
| is as soon as you have an exception that it cannot get | | | | Income Tax refund. |
| it correct unless or until it is updated and corrected. | | | | Recently I saw one case where the refund actually |
| If you are given the correct tax coding and you work | | | | received was in excess of £4,400 and this covered |
| a full tax year for the same employer and they apply | | | | four tax years. In addition the current tax years PAYE |
| the correct tax code then you should be correctly | | | | code was amended resulting in a Tax refund in one |
| taxed. Already there are three variables - you need to | | | | month of some 900 so in total that's a refund 5,300. |
| have the correct tax code - you need to work a full | | | | This refund arose as an incorrect code number had |
| tax year and you employer needs to apply the code | | | | been issued by the Inland Revenue restricting the |
| correctly. | | | | personal allowances when in fact full personal |
| There are many examples that can give rise to an | | | | allowances were due. |
| exception that can usually mean that a PAYE | | | | So it is well worth checking with a Tax Agent to |
| employee is over taxed. | | | | ensure that you are not due a refund. |