Tax refunds are sometimes automatically generated by the HMRC when an error in tax deductions is realised at the end of the tax term but most of the time, claimants need to apply for a tax refund when they find out that they have overpaid taxes; either from their wages or profits. Through this blog post, we aim to explain how long a tax refund takes when a claimant is using the R40 for a tax refund claim. Additionally, we will also discuss other situations when taxpayers may find that they have overpaid taxes and what they can do to reclaim them.

How Long Does A Tax Refund Take Using An R40 Form?

It usually takes the HMRC between 8-12 weeks to refund taxes after a claimant has filed an application for tax refund using the R40 form. While smaller amounts such as those below £1,000 can be processed earlier especially if the application has been made avoiding the busiest period of self-assessment returns being filed around January, processing of larger amounts takes time due to the checks involved during the process of a tax refund application.

While claimants can followup up with HMRC to confirm the status of their tax refund application once an R40 form has been submitted, it will not be of much help to ask them before 5 weeks in case of an online application and 6 weeks if you have applied through the post.

Once your tax refund has been authorised by the HMRC, it takes 5 working days for the amount to be transferred to your bank account; while cheques and payable orders can take up to another 5 weeks.

Claimants need to make sure that an R40 form is used to claim tax refunds from deductions made on the interest earned through annuities, savings and investments (and not any other sources of income).

While filling in the R40 form, you will need the following documents available with you:

  • bank account and building society statements 
  • dividend vouchers
  • income statements from trusts and estates
  • letters from the DWP for state benefits that you receive
  • P60 and P45 forms from a pension payer or employer

Can I Get Tax Refund Through Wages?

Yes, if you have overpaid your tax paid through wages under the PAYE scheme, you can get a tax refund by contacting the HMRC. 

At the end of a tax year, HMRC sends all taxpayers a P800 form which outlines details of their incomes and tax deductions for the entire tax term. Sometimes, you will find through the P800 that you are due for a fund. If this is the case, you will also be told whether you will be repaid the amount through an online bank transfer or a cheque sent through the post.

If not, you can reconcile with your bank statements and books of accounts to make sure that the document does not carry incorrect data and then contact the HMRC. To calculate your taxes and income accurately before contacting the HMRC, you will need the following:

  • your form P60 and/or P45 from your employer(s) or pension provider(s)
  • your form P11D from your employer, if you receive taxable benefits-in-kind
  • details of taxable state benefits that you have received
  • bank statements and  Building society statements 
  • dividend certificates
  • details of rental income and expenses

When you call HMRC about your tax refund due to overpayment, you must make sure that you have the following information available with you:

  • your personal details: including  your full name, address and date of birth
  • your National Insurance number
  • details of your employers or pension providers and their PAYE scheme reference number
  • Detailed estimates of your earnings and/or pensions from each source for the current tax year (with documentation)

Why Do Have I Overpaid Taxes?

The reason(s) why salaried individuals may overpay their taxes through a PAYE scheme may be classified as follows:

  • They started a new job and were assigned an emergency tax code on a temporary basis
  • Their employer used an incorrect tax code
  • They held a job for a part of the year (and not the entire tax term)
  • They had more than one job at the same time
  • They are a student who only worked during holidays
  • Their “other incomes” have been reduced
  • They stopped working in the middle of the year and had no taxable income or benefits
  • Their circumstances changed; such as moving from full time to part-time work

In the case that a taxpayer has overpaid their tax due to any of the following reasons, 

  • being put on an emergency tax code due to starting a new job,
  • having two jobs simultaneously, or
  • switching from a full time to a part-time job

they can claim a tax refund and reclaim the amount from HMRC after the end of the tax year. Claims for overpaid taxes can be made for up to four years. This means that an overpaid tax in 2022 can be claimed until 2026.

How Can I Claim A Tax Refund?

To claim a tax refund, you will need to use the P60 form and share the following details with HMRC:

  • your earnings in total
  • the amount of income tax that you have paid
  • the amount of income tax that you have paid in excess

Additionally, you must also provide details of your National Insurance number and employer reference number.

In the case that a taxpayer has overpaid their tax due to any of the following reasons, 

  • being put on an emergency tax code due to starting a new job,
  • having two jobs simultaneously, or
  • switching from a full time to a part-time job

they can reclaim the amount from HMRC after the end of the tax year. Claims for overpaid taxes can be made for up to four years. This means that an overpaid tax in 2022 can be claimed until 2026.

How Are Tax Identification Numbers Used In The UK?

Tax identification numbers are used to track and monitor the tax accounts of individuals. Although the term TIN Number is not specifically used in the UK in its strictest sense, the HMRC issues two TIN-like numbers to members of the public. The purpose and use of these are described below:

  • The Unique Tax Payer Reference (UTR): This is a ten-digit set of numbers issued by the HMRC to individuals and businesses who qualify for paying tax returns in the UK. You will find this number on the front page of the tax return (form SA100 or CT600). In addition to this, you will find it on a “Notice to complete Tax Return” (form SA316 or CT603) or a Statement of Account. It is also printed next to the headings of “Tax Reference”, “UTR” or “Official Use”; but the appearance and terms that are used will depend on the type of document issued. 
  • The National Insurance Number (NINO): This includes two letters which are followed by six numbers and then only one of the letters between A, B, C and D. Individuals residing in the UK will be issued a NINO once they are 16 years of age. They will be informed by the Department for Work and Pensions (DWP) or the HMRC. If you are an employee, you will find this number on your payslip as well as on a Statement of Account issued by HMRC. It links individuals to their records of national insurance contributions, tax payments, student loans as well as social security benefits.

What Is An Emergency Tax Code?

An emergency tax code or a non-cumulative tax code is one that only takes into account the period in question for your tax calculation and deduction. This means that depending on whether you receive your pay on a weekly or monthly basis, a non-cumulative, temporary tax code will apply for that specific period only and it may change the next time you receive a payslip. In the case of weekly pay, you will find a W1 extension at the end of your tax code; while for a monthly salary your tax code will end with an M1 extension.

This means that the income tax rate is applied to the entire sum of income(s) of an individual without the deduction of Personal Allowance from their earnings. In case an individual has paid a sum of income tax before a non-cumulative tax code is applied to their income, the amount cannot be adjusted. Therefore, there are chances that taxpayers will end up overpaying their taxes when a non-cumulative tax code is assigned to them in the middle of a tax term.

However, this overpaid amount is recoverable by contacting the HMRC and updating your employment information with them.

Conclusion:

Taxpayers who have overpaid taxes on their annuities, savings and investments will need to use an R40 form to file for a tax refund from HMRC. It usually takes between 8-12 weeks for the tax refund claim to be processed. While smaller amounts such as those below £1,000 can be processed earlier especially if the application has been made avoiding the busiest period of self-assessment returns being filed around January, processing of larger amounts takes time due to the checks involved during the process of a tax refund application.

FAQs: How Long Does A Tax Refund Take Using An R40 Form?

How long does it take for HMRC to refund overpaid tax?

In the case of tax refunds on savings and investments, it may take at least 5 weeks for your tax refund process once you have filed an R40 form. From there on it takes then another 5 days for the amount to be transferred to your bank account once your claim is authorised by HMRC. 

Can I track my tax refund online?

Yes, you can track your tax refund online through the gov.uk.website. However, this is only possible if you have claimed your overpaid tax online as well.

Can you get a tax rebate on PAYE?

Yes, you can get a tax rebate on PAYE for up to the past four years.

Do HMRC automatically refund overpaid tax?

HMRC refunds overpaid tax; it may be done automatically at times, while you may need to apply for it at certain times.

How do I claim tax back on my salary?

To claim a tax refund, you will need to use the P60 form and share details of your earnings, the amount of income tax that you have paid and the amount that you have paid in excess with HMRC. Additionally, you must also provide details of your National Insurance number and employer reference number.

References:

What is an R40 Form?

R40 – Claim for repayment of tax deducted from savings and investments

Form R40: Claim for repayment of tax deducted from PPI payouts and savings and investments

PPI Tax Refund, how does it take for R40 to be processed? – Community Forum – GOV.UK

Claim a refund of Income Tax deducted from savings and investments (R40) – GOV.UK

How long does it take to get a tax refund from HMRC?

How do I claim back tax I have overpaid through PAYE on wages or pensions? | Low Incomes Claim a tax refund – GOV.UK

What if I pay too much tax?

Emergency tax codes – Which?

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