As the UK tax season approaches, the potential of a tax rebate sparks the attention of both businesses and individuals.
Knowing how to apply for a tax return is a commonly asked question that we get here at LJS Accounting Services, and we hear many misconceptions about whether you need to manually apply or if it happens automatically.
We understand that obtaining a tax rebate may be complicated and time-consuming, and that’s why we are here to assist you if you’ve paid too much tax.
In this blog, we’ll explore the ins and outs of HM Revenue Customs (HMRC) tax rebates. We’ll help you to understand whether you are eligible for a tax refund, what documents you need to provide, as well as submission deadlines.
Discover how our expert team at LJS Accounting Services can assist you in navigating the tax season effortlessly. Read this helpful guide for more information.
What is a Tax Rebate?
A tax rebate is also known as a tax refund, and the terms are often used interchangeably.
If the rate you pay tax is higher than the income tax rates of tax owed, HMRC should contact you explaining that you are due a tax rebate. This will relate to your personal (taxable) income. You can also claim tax relief if you qualify for tax benefits like business-related costs.
HMRC will contact you with a P800 between June and October of each tax year to inform you of any eligible refunds.
In the instance of several sources of personal income, HMRC gives employers individual tax codes for employees to make sure they’re deducting the right amount.
While the tax system generally operates efficiently, you may notice the occasional flaw if HMRC doesn’t have accurate or up-to-date information. Ensure you check your ability to claim the tax back and be ahead of the game.
Do You Qualify For a Tax Refund?
You may confuse tax refunds and council tax but there is no direct relationship between the two. In contrast, various factors including overpaid taxes, tax-free allowances, deductions, and life changes, may impact your council tax status which consequently has an impact on your tax status.
If the following situations apply, you may be due a tax rebate:
- Overpaid Taxes: Paying too much tax through Pay As You Earn (PAYE) or Self-Assessments
- Tax-Free Allowances: UK taxpayers may have tax-free allowances, such as Personal Allowance and Marriage Allowance.
- Tax Deductions: Qualified deductions include allowed costs for self-employed individuals (for instance, office rent, equipment, travel etc).
- Life Changes: Significant life alterations may influence your tax status. This can include beginning a new career, retiring, or having a child.
An accountant can simplify this complex process for you. Additionally, the Gov.uk website offers helpful advice and tools such as the P800 tax calculator!
What Documents Are Needed to Make a Claim?
- Income and Expense Record: This includes sales receipts, invoices, and documentation of business-related costs, payroll and operational expenses
- Financial Statements: To demonstrate financial performance, you must provide their balance sheet, income statement, and profit and loss statement.
- Payroll Records: If your business has employees, payroll records are essential. This includes wage and salary information, payroll taxes withheld, and any employment-related taxes paid by the business.
- Bank Statements: These support the accuracy of your financial records.
- Tax Forms: This includes VAT (Value Added Tax) records, payroll tax returns, and other relevant documentation.
- Asset and Depreciation Records: Owned assets require documentation such as purchase invoices, asset registers, and reduction schedules.
- Expense Receipts: This includes all receipts regarding business travel, entertainment, and other deductible expenses.
- Sales and Purchase Registers: Every transaction the company completes throughout the tax year should be available for inspection upon request.
- Tax Identification Numbers and Business Registration: This involves documentation of the business’s tax identification number and legal registration details. Likewise, it includes the business name, location, type, and ownership structure.
- Any Specific Industry or Tax-Related Documents: Certain industries have specific tax rules which may require additional documentation. For example, businesses involved in research and development may need to provide documents related to R&D tax credits.
When is The Tax Rebate Due?
In the UK, the financial year spans from April 6th to April 5th of the following year.
You have until 31st January 2024 to file your tax return if you want to receive a tax rebate for the tax year ending 5th April 2023.
However, if you prefer paper applications, be mindful that the deadline to claim your tax refund is by 31st October 2023.
When Will You Receive the Refund?
You should receive funds automatically within five business days.
If your online refund claim is not completed within 21 days, HMRC will send you a cheque within six weeks of the date on your tax calculation letter.
Despite the complexity of the tax system, there is potential to claim hundreds of pounds in refunds. Knowledge is power and if you have it on your side, you could be winning.
With LJS Accounting Services, you can claim your tax rebates with ease and maximise your refund to save you money. Secure expert guidance from our knowledgeable and friendly team by booking a free consultation today!