This blog answers the question “What is an Early Years Adjustment Tax refund?” A P 50 form can be used to apply for claiming Early Years Adjustment tax refunds from HMRC. Early Years Adjustment tax repayments are usually claimed by unemployed workers on their previous years tax declarations.

What is an Early Years Adjustment Tax refund?

An early years adjustment tax refund is the compensation payment made to make amends for tax calculation errors or misjudgements by HMRC, the Department for Work and Pensions or the Department for Inland Revenue on your tax returns.

In cases of overpayment, you will need to provide details on your opinion of how and why the error on your income tax or another type of tax return statement has been committed. This challenge should not dispute the authenticity of any factual data used by the government organization.

The early years adjustment tax repayment is paid out even at the expiry of the legal time limit for getting reimbursement if the overpayment has been made due to an error by a government department.

A mandatory requirement for availing this refund is the absence of any disagreements on the facts in attributing the mistake to the officials of HMRC or any other government agency. The Taxes Management Act 1970 states that a claim regarding refunds can only be made within 4 tax years of the error.

What can I do if I am too late to make a claim for the repayment of my Early Years Tax?

A law called the Extra Statutory Concession B41 allows HMRC to refund taxes for previous years.This compensation only applies in situations where the HMRC or another government agency, such as the Department for Work and Pensions, has made a mistake in your tax affairs and there is no doubt about the facts of the case.

This rare exception can be used to backdate an Early Years Adjustment beyond 4 years of the error being made on your tax returns. Possible reasons for asking for the Extra Statutory Concession could be the demand for repayment of Emergency Tax on a second job. Here you will need to explain why you could not register your second job.

You will need to use your Personal Public Service Number to apply for this refund payment. Along with the PPSN you will also need to send or attach electronically a copy of your income tax returns for that year.

Another probable reason for using the B 41 concession could be that you made pension payments which increased your basic tax band. This could be a change of going from the basic rate band (£12541 – £50270)to the higher rate band (£50271-£150000). You can also ask HMRC for compensation in case it has included an incorrect state pension amount on your tax returns (P45 or P50) 

This incorrect figure would be an excessive amount which has  led to an overpayment of your income tax. It is a very rare error but it can be compensated by the HMRC if it happens.

If HMRC has not used the correct PAYE code which you provided your employer when you were hired. This can happen if somehow those details have not reached HMRC from your employer or pension provider.

The extra statutory concession law can be used to dispute the calculation of your refund on a P800 form. This error could result because some of your income was missed out from the calculation or the savings estimate figure was wrong (according to you). The mistake on HMRC’s decision on your P800 tax repayment form can also result from not considering your claim for the marriage allowance.

What are the time limits for backdating refunds for Early Years Adjustment?

An EYA overpayment adjustment can only be backdated 4 years. You need to claim an overpayment within the time period for your claim to succeed. 

  • Tax year 2018/19 (year ended 5 April 2019) you can claim by 5 April 2023
  • Tax year 2019/20 (year ended 5 April 2020) you can claim by 5 April 2024
  • Tax year 2020/21 (year ended 5 April 2021) you can claim by 5 April 2025
  • Tax year 2021/22 (year ended 5 April 2022) you can claim by 5 April 2026
  • Tax year 2022/23 (year ended 5 April 2023) you can claim by 5 April 2027

In cases of ‘official error’, HMRC might agree to making repayments for years prior to 2018/19 under their ‘Extra-statutory Concession B41’. 

How do I claim a (Early Years Adjustment) refund if it is too late to amend my tax returns?

You can claim a refund on your tax returns even if it is too late to amend your tax returns. You need to write a letter to HMRC, mentioning why you have overpaid.

Your letter should:

  • Provide  your name, address and social security number. You also should mention your Unique Taxpayer Reference number.
  • Be mentioning information related to  the tax year of the refund
  • state that you are applying for “overpayment assistance”
  • Include as much information as possible regarding why you have overpaid. You can also disclose the exact miscalculated entry.
  • Attach proof of the taxes you have paid, including copies of P60 and P45 if you have them. keep the originals documents with you
  • State how you would like to get a refund. Would you like it to be sent into your bank account, or paid through a check. You can also get the amount reduced from your next years tax returns
  • Be signed in ink and dated with a declaration typed below it reading “ I hereby declare that, to the best of my knowledge, the provided information is accurate and true”

How can I claim an early years adjustment on my tax returns using the P 50 form?

The P50 form can be used to apply for early years adjustment (refund) on previous HMRC tax returns, once you have stopped working.

You can use the P 50 form to request a tax refund :

  • If you have been unemployed for 4 weeks or more
  • If you are not entitled to any of the following taxable benefits. The Job Seekers Allowance, Taxable Incapacity Benefit, Contribution based Employment and Support Allowance (ESA), Carer’s Allowance (CA)
  • If you don’t have any plans to start working again
  • If you are permanently retired without and pension plan from your previous employer
  • If you went back to being a full time student after you were unemployed.

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Do not use the P 50 form if:

  • You have received a pension drawdown and want to claim a refund on it.
  • You are jobless and plan to resume work for another employer within 4 weeks.•
  • If you are claiming the Job Seekers Allowance, the Taxable Incapacity benefit, the Contribution based Employment and Support Allowance or the Carer’s Allowance, Jobcentre Plus will automatically send you a repayment so there is no need to apply for it. The refund will be sent when your claim ends or on April 5th.
  • If you are on a professional pension, your pension provider will refund you the money on request. You can also choose to wait until April 5th, as the refund will automatically be sent to you by HMRC on this date.
  • If you have taken your entire pension amount as a lump sum you need to contact HMRC for a P53 form instead

Can I claim refunds for amounts withheld from my earnings when I am made redundant?

Yes, you can claim refunds for amounts withheld from your earnings when you were made redundant by your employer.

It is possible to request a refund of any amount withheld so far in the tax year if you become unemployed on the basis of unused personal allowances However, since your final tax payable is calculated annually, when you owe a refund depends on your taxable income from the time you were made redundant and the end of the official tax year..

If you start another job and give your new employer a P45 from your old job, your new employer should refund you any tax overpayments.

If you are starting a new job and cannot provide them with a P45, you need to request them to mark a checklist of the same form. HMRC will then restore your tax status by the end of the tax year which is after April 5th

If you do not start a new job, it is possible to obtain a temporary reimbursement of social charges unless you are getting taxable benefits such as unemployment benefits. For this refund you will need to complete a P50 form

There are different repayment thresholds depending on your student loan repayment plan

Conclusion

This blog post addressed the question “What is an Early Years Adjustment Tax refund?” You need to show proof of being “retired” from work without a pension plan from your last employer to claim Early Years Adjustment refunds or just  evidence of being unemployed for at least 4 weeks. There are certain time limits for claiming Early Years Adjustment repayments from HMRC (usually a period of 4 years).

Please feel free to comment on the content or ask any questions in the comments section below :

Frequently Asked Questions (FAQs) :What is an Early Years Adjustment Tax refund?

What are the commonly used methods for selecting a worker for redundancy?

The following commonly used methods are utilized for choosing an employee for redundancy:

  • last in, first out (employees with the shortest seniority are selected first)
  • Asking for volunteers for redundancy
  • By using disciplinary files listing previous actions or warning to employees
  • Staff evaluation scores and years of experience

Your employer can fire you without a selection process if your position no longer exists, for example if:

  • Your employer closes an entire factory in a company and lays off all the employees working there
  • You are the only employee in your part of the organization.

The following reasons for dismissing an employee can be considered as unfair dismissal:

  • Sex (discrimination)
  • gender transformation
  • Marital status
  • sexual orientation
  • race
  • disability
  • religion or belief
  • age
  • Whether or not you belong to a trade union
  • Health and safety 
  • Working patterns e.g. part term(contract) employee or permanent employees
  • maternity leave, childbirth or pregnancy
  • paternity leave, parental leave or family leave
  • You exercise your legal rights
  • Whistleblowing, for example disclosing misconduct on the part of your employer
  • Participate in legal industrial action lasting 12 weeks or less
  • Acting for health and safety reasons
  • perform jury service (while on the job)
  • You are a trustee of a company pension plan

In which conditions am I entitled to request a tax refund?

You could be entitled to request a tax refund for numerous reasons including:

  • You were only working during your summer holidays as a student
  • You have more than one job and your employer has therefore applied the incorrect tax code to your HMRC returns
  • You might be on a pension income and paying excessive amounts of tax
  • You might also have overpaid tax on your redundancy pay or on income from abroad
  • You could be self employed and see your yearly income fluctuate regularly

What happens if I don’t submit my self assessment on time?

You should have submitted your self assessment tax returns by their deadline. You cannot claim any tax refunds without filing income tax returns. You will also be hit by hefty fines such as a £100 fine for missing the deadline by the first day. These penalties can add up to £900 over a period of three months.

Citations

Enactment of Extra Statutory Concessions Order 2018

Taxes Management Act 1970

B 41 Extra Statutory Concessions

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