Tax refund

pterri

Quick one, I’ll be paid up to the 27th may and then I’ll be on ISA and SIPP until my lovley DB in three years. I’m a higher rate payer but will be in the 20% band this year. Will HMRC sort things out and pay back the excess income tax I’ve paid at some point this year or will I need to wait until next year and force it with a SA? I’m not desperate for the money so content to let things work through the system and get the refund whenever, if so any idea when they do the reconciliation? 

Dazed_and_C0nfused

pterri said:

Quick one, I’ll be paid up to the 27th may and then I’ll be on ISA and SIPP until my lovley DB in three years. I’m a higher rate payer but will be in the 20% band this year. Will HMRC sort things out and pay back the excess income tax I’ve paid at some point this year or will I need to wait until next year and force it with a SA? I’m not desperate for the money so content to let things work through the system and get the refund whenever, if so any idea when they do the reconciliation? 

Neither.

They will automatically review things once the tax year has ended and send a calculation detailing any tax overpaid (or underpaid).

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

If you are taking taxable income from the SIPP then it might be possible to sort things through a new tax code (including your earnings at the start of the tax year) which would enable the SIPP provider to refund any overpaid tax.

But you might need to request that and that doesn't alter the review that will be done once the tax year ends.  There just might be anything to refund.

pterri

Dazed_and_C0nfused said:

pterri said:

Quick one, I’ll be paid up to the 27th may and then I’ll be on ISA and SIPP until my lovley DB in three years. I’m a higher rate payer but will be in the 20% band this year. Will HMRC sort things out and pay back the excess income tax I’ve paid at some point this year or will I need to wait until next year and force it with a SA? I’m not desperate for the money so content to let things work through the system and get the refund whenever, if so any idea when they do the reconciliation? 

Neither.

They will automatically review things once the tax year has ended and send a calculation detailing any tax overpaid (or underpaid).

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

If you are taking taxable income from the SIPP then it might be possible to sort things through a new tax code (including your earnings at the start of the tax year) which would enable the SIPP provider to refund any overpaid tax.

But you might need to request that and that doesn't alter the review that will be done once the tax year ends.  There just might be anything to refund.

Thanks, I’ll probably leave it to shake out. I MAY be doing some consultancy this year so not completely sure what my earnings will look like, either way it will be below the higher limit. 

Albermarle

pterri said:

Dazed_and_C0nfused said:

pterri said:

Quick one, I’ll be paid up to the 27th may and then I’ll be on ISA and SIPP until my lovley DB in three years. I’m a higher rate payer but will be in the 20% band this year. Will HMRC sort things out and pay back the excess income tax I’ve paid at some point this year or will I need to wait until next year and force it with a SA? I’m not desperate for the money so content to let things work through the system and get the refund whenever, if so any idea when they do the reconciliation? 

Neither.

They will automatically review things once the tax year has ended and send a calculation detailing any tax overpaid (or underpaid).

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

If you are taking taxable income from the SIPP then it might be possible to sort things through a new tax code (including your earnings at the start of the tax year) which would enable the SIPP provider to refund any overpaid tax.

But you might need to request that and that doesn't alter the review that will be done once the tax year ends.  There just might be anything to refund.

Thanks, I’ll probably leave it to shake out. I MAY be doing some consultancy this year so not completely sure what my earnings will look like, either way it will be below the higher limit. 

If your earnings are uncertain then probably best to leave it until the tax year ends.
I was a 40% taxpayer and I stopped work at the end of June ( 2021) and started to take a pension at a much lower income, so over the whole tax year I did not have enough income to be taxed at 40%.. About 6 months after the end of that tax year, I received a P800 calculation showing I was owed about £2,000 due to paying 40% tax during my last months of employment. Which I claimed online and it was quickly paid into my bank.

pterri

Albermarle said:

Rpterri said:

Dazed_and_C0nfused said:

pterri said:

Quick one, I’ll be paid up to the 27th may and then I’ll be on ISA and SIPP until my lovley DB in three years. I’m a higher rate payer but will be in the 20% band this year. Will HMRC sort things out and pay back the excess income tax I’ve paid at some point this year or will I need to wait until next year and force it with a SA? I’m not desperate for the money so content to let things work through the system and get the refund whenever, if so any idea when they do the reconciliation? 

Neither.

They will automatically review things once the tax year has ended and send a calculation detailing any tax overpaid (or underpaid).

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

If you are taking taxable income from the SIPP then it might be possible to sort things through a new tax code (including your earnings at the start of the tax year) which would enable the SIPP provider to refund any overpaid tax.

But you might need to request that and that doesn't alter the review that will be done once the tax year ends.  There just might be anything to refund.

Thanks, I’ll probably leave it to shake out. I MAY be doing some consultancy this year so not completely sure what my earnings will look like, either way it will be below the higher limit. 

If your earnings are uncertain then probably best to leave it until the tax year ends.
I was a 40% taxpayer and I stopped work at the end of June ( 2021) and started to take a pension at a much lower income, so over the whole tax year I did not have enough income to be taxed at 40%.. About 6 months after the end of that tax year, I received a P800 calculation showing I was owed about £2,000 due to paying 40% tax during my last months of employment. Which I claimed online and it was quickly paid into my bank.

Yes, I’ll probably do that. I’ve got enough SIPP/isa money that I can wait for a refund 

leosayer

I find this rather annoying. 

I structured my salary and pension contributions last year so that I would only pay basic rate tax but my severance pay in January was taxed mostly at the higher rate. 

So now I have to wait 6 months to get back the £3k I'm owed!?

ali_bear

At least. The wheels of HMRC are slow to turn. Have to assume that they are fundamentally knackered, like all public services at this time. 

If I was being cynical I may have alluded to their lack of productivity being somehow related to the increased work-from-home culture in the post-COVID world. But that would be outrageous. 

Albermarle

leosayer said:

I find this rather annoying. 

I structured my salary and pension contributions last year so that I would only pay basic rate tax but my severance pay in January was taxed mostly at the higher rate. 

So now I have to wait 6 months to get back the £3k I'm owed!?

You can call them and try and get it back earlier, but you could be waiting a long time on the phone and it may or may not get you the refund quicker.