Time running out for thousands of people to claim over-paid tax
Author: Richard Mannion, National tax director
The deadlines for claiming over-payments of tax by people outside the self assessment system are being curtailed substantially. 31 January 2012 is the deadline to claim overpayments from 2005/06.
Each year, thousands of people unwittingly pay more tax to HMRC than they should. However, the deadline to claim back these overpayments is changing so people will have less time to make these claims.
Taxpayers who are outside the self-assessment system and who have over-paid tax for the 2005/06 tax years only have until 31 January 2012 to reclaim their money.
People who have over-paid tax for the 2006/07 tax years have until 31 March 2012 to reclaim their cash, while anyone who has overpaid for 2007/08 has until 5 April 2012. Thereafter, individuals will have to submit any claim within four years of the end of the relevant tax year.
“I would guess that there are tens of thousands of people who could rightly claim back some tax for these years. If they miss the relevant deadline, their opportunity will be lost for ever,” said Richard Mannion, national tax director at Smith & Williamson, the accountancy and investment management group.
Richard highlights the groups of people most likely to be affected:
- Pensioners who may have a small amount of bank interest – it may be possible for them to reclaim the tax on bank interest;
- Students who work during their vacations and have been put on emergency tax – their earnings may fall below the income tax threshold for the relevant year;
- Children in receipt of interest on bank accounts – in most cases, the children’s income is below the income tax threshold and so they should not be taxed on this income
- 40% tax payers who are on PAYE and who make contributions to a personal pension or gift aid payments – while they will automatically get tax relief on the payments at 20%, they need to ask for the tax relief at 40%.
“What concerns me is that many of the people who are rightly owed refunds can ill-afford the overpayment. A substantial group of these will be the elderly in receipt of a pension who also get a little extra on bank interest or maybe they have a small part time job. I am concerned that they may be unaware of their rights and the tightening deadlines,” explained Richard.
Anyone who is owed tax needs to complete form R40 which is available on the HMRC website: http://www.hmrc.gov.uk/forms/r40.pdf
HMRC Q&A briefing: www.hmrc.gov.uk/about/deadlines-taxpayers.htm
Richard Mannion, Director, National tax
T: 020 7131 4252
E: Richard Mannion
Disclaimer
By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Details correct at time of writing.
Smith & Williamson Limited
Regulated by the Institute of Chartered Accountants in England and Wales for a range of investment business activities. A member of Nexia International
