Can I delay repayment of overpaid tax?

turtlemoose

I've tried to search for the answer to this but have been unable to find my exact scenario - hopefully someone on here might know the answer!

I've overpaid tax by c. £1300 this year. I'd rather not have this back as a lump sum at the moment - does anyone know if HMRC would apply it to my 21/22 tax code, if I ask them to?  Or if I do nothing, will they automatically pay it me back or will it sit there until I claim it? ie could I leave it and claim it back in the 22/23 tax year?

molerat

They will pay it back automatically early on in the 21/22 tax year.  Likely they will ask for bank account details and if they get no response they will send a cheque.  Why have you overpaid and why has it not been refunded in year through PAYE ?

Dazed_and_C0nfused

You cannot have it refunded via your tax code.

As molerat says though if you do nothing it will be automatically refunded during the 2021:22 tax year although I'm not sure quite how early.  gov.uk mentions by November (2022 for 2020:21 tax year).

https://www.gov.uk/tax-overpayments-and-underpayments

If you do not respond to the repayment letter HMRC will send you a cheque several weeks later.

MDMD

Why don’t you want the money back until later on? Surely it’s better in your pocket than theirs?

turtlemoose

Thanks both, not the answer I was hoping for but oh well! I overpaid due to final wages, holiday pay, a little PILON, refunded extra annual leave purchase, and car allowance all paid in one lump sum. (Plus an untaxed redundancy payment). I was unemployed for a few months, and I now work part time in a much lower paid job - so I presume that's why it hasn't come back via PAYE - current employer is taking tax at the basic rate. 

Dazed_and_C0nfused

If your tax code is corrected by HMRC you may well find your new employer refunds the excess tax deducted to you (providing that the new tax code is for the 2020:21 tax year).

turtlemoose

@Dazed_and_C0nfused hmm, interesting! My employer has me on 0T as my tax code at the moment, I've only had one pay period with them - so I am expecting that that will be updated soon. My latest coding notice says 1087LX (includes tax owed for self assessment 18/19). 

Dazed_and_C0nfused

Are you expecting to complete a Self Assessment return for 2020:21?

General_Grant

I'm wondering about UC.

Dazed_and_C0nfused

General_Grant said:

I'm wondering about UC.

Possibly yes.  

And if the op has to file a Self Assessment return for 2020:21 and can retain a non cumulative tax code for the rest of the tax year  then the timing of the refund is in the op's hands as it down to them when they file their return (and whether they ask for any overpayment to be refunded or not).

turtlemoose

Ref self assessment - I registered as self employed in Oct 2020 (was having no luck with job hunting) however the profit is very low from that (less than £50 total so far) but I haven't really give it much focus due to getting two PAYE jobs in Nov 2020 (quit the worst one mid Dec after being offered more hours in the second one). I'm not sure if I will need to do self assessment for 20/21 for that income - although if I get the time/motivation I may be able to increase that SE profit but realistically I can't see it being  more than around £100-£150 a month max between now and end March 2021. I've never been self employed before, but an online search tells me I'm below the threshold for filling out SA.  I have completed self assessment in the past though as I used to have rental income but my last tax return for that was 18/19, HMRC confirmed no SA required for 19/20. 

From the information you've kindly given me, it seems likely that either my current employer will pay me the overpaid tax when they update my tax code, or if they don't then HMRC will automatically issue a refund in April 2021 (although I appreciate this may take some time until I actually received it due to the volume they're dealing with).