What is a Tax Rebate / Reasons Why You Could Be Due A Tax Rebate?

what is a tax rebate

What is a tax rebate and why you could be due a tax rebate? This question might be surprising to you as you might have missed many tax rebates and claims for the tax refunds, in case you have no idea what is. To assist you in this and provide you with the best tax tips, we will walk you through what is a tax rebate and why you need to get one. Moreover, we will discuss the reasons in which you could be liable to get a refund from the HMRC.

Moreover, we will discuss the steps to get or claim the tax rebates from the HMRC. So, let’s start our exciting discussion about the tax rebates in the United Kingdom and how they work!


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What is a Tax Rebate?

A tax rebate is a tax refund claimed by the employees and self-employed persons if they have more as tax returns. At the end of the financial year, you can calculate the tax returns and allowances. It will help you discover the areas where you can claim a tax refund from the HMRC.

HMRC can be claimed for the previous four years. So, if you have not claimed any tax rebate in the last four years, you can go to the HMRC website and fill in a form to get your additional tax payments back. One thumb rule to know if an employee or contractor can claim a tax rebate or not is to recognise the business expenses incurred by the employees and not the companies. So, if a person is making expenditures to complete the tasks, he can claim tax rebates from the HMRC.

During the job, many people pay taxes and National Insurance Contributions (NICs). However, they ignore the overpayment of taxes.


Am I Due A Tax Rebate?

Following are the reasons where you could be due a tax rebate and you could possibly claim a tax rebate from the HMRC. If you are an employee and have incurred some business expenses, then it is likely you have paid more in taxes. Let’s discuss all of these reasons briefly!

Business Travels: If you are travelling for the purpose of your business or as a part of your job, you are likely to pay high taxes.

Uniform/ Clothing: If you incur the cost of washing and cleaning your uniform and official dresses, you can calculate the expenses and taxes for claiming a tax rebate.

Equipment: If the employees are using their own equipment to carry out their job activities, then they can claim a tax refund for the costs of this equipment.

Subscription fee: When an employee or self-employed person is supposed to pay a fee to get the subscription for completing their tasks, then these expenses will be tax deductible. In other words, the employees can make a claim for these costs and get a tax rebate from the HMRC.

Emigrating from the United Kingdom: If you are a resident of the United Kingdom and planning to leave the UK in a tax year, you can claim tax relief from the HMRC. It will help you get all the extra taxes you have paid to HM Revenue & Customs (HMRC).

Freelancers Working Remotely From Home: If you are working from the comfort of your home, you might incur some business expenses like the use of electricity and personal equipment. Therefore, HMRC allows you to claim a tax refund.

Incorrect Tax Code: It is also possible that you have submitted an incorrect tax code, so you can claim a tax refund in this particular case.

Switching Jobs Frequently: It is also possible you are switching jobs frequently or have been unemployed for a longer period before you get a new job. In this scenario, you can claim a tax refund. Conversely, if you are doing more than one job, you can also get tax rebates.

Working with the CIS Industry: CIS industry contractor makes overpayments and, thus, HMRC allows the contractors and sub-contractors to claim tax relief at the end of the tax year.


How Can I Claim a Tax Rebate?

You can use claim a tax rebate by analysing your tax returns and the types of forms you need while submitting for a tax rebate. Follow these steps to get a tax refund:

  1. Identify if you are due a tax rebate
  2. Check how much tax you owed from the HMRC
  3. Claim the Tax Rebates
  4. For jobseekers and other allowances, use the P45 form
  5. For an employed person for four weeks, use the P50 form

You can download these forms and fill in the relevant parts and post them to the HMRC. The other reasons also consist of cashing in on the pensions, job redundancy and the tax payment as non-UK residents.


The Bottom Line

Wrapping up the discussion, we can say that tax rebates are the tax claims that employees, contractors or self-employed persons make as a result of overpayments of taxes. However, HMRC has not automated the detection of these overpayments. So, it is necessary for the people to know the reason for claiming a tax rebate.

A tax rebate can be claimed for the previous four years. The general rule is to apply for those expenses on business activities rather than for personal use. The redundancy payment is tax-free up to £30,000. So, you can claim back some of the taxes and NICs you paid while you were a job holder and paid all the taxes.


Tax rebates can become tricky at times. But Accountants at the AccountingFirms can remove all your tax worries instantly by providing a professional and convenient solution in compliance with HMRC.


Disclaimer: All the information provided in this article on what is a tax rebate, including all the texts and the graphics, is general in nature. It does not intend to disregard any of the professional advice.