A tax rebate is a refund of tax which has been overpaid. There are a number of reasons why tax may have been overpaid? Tax payers in the often forget to claim their refunds and miss the opportunity to add extra cash to their income. In this article we will discuss two ways that you can get a refund back from the HMRC.
1.Refund or interest on your Corporation Tax
If your company or organization pays too much Corporation Tax, HM Revenue and Customs (HMRC) will repay what you’ve overpaid and may also pay you interest on it.
HMRC’s interest rate is 0.5%.
Use your Company Tax Return to tell HMRC if you think you’re due a Corporation Tax refund (known as a ‘repayment’) and how you want it paid.
You can either:
- get it paid directly to your company’s bank account or someone else’s account – include the account number and sort code on your tax return
- use it to pay your next Corporation Tax bill or a late filing penalty
- use it to pay other tax your company owes, eg PAYE or VAT
When HMRC will pay you interest
HMRC will pay you interest if you’ve:
- paid tax early (known as ‘credit interest’)
- paid more than your company owes (known as ‘repayment interest’)
The interest is taxable – include it as income in your Company Tax Return.
HMRC will usually pay interest from the date you pay your Corporation Tax to the payment deadline.
The earliest date they’ll pay interest from is 6 months and 13 days after the start of your accounting period.
If you pay more than you owe
HMRC will usually pay interest on your refund from either:
- when the tax was due
- when you paid the tax, if you paid after the due date
If you pay in instalments
HMRC automatically pays you the interest after they know your final Corporation Tax bill for the accounting period, which is normally when you file your Company Tax Return.
If you pay by quarterly instalments, your interest is calculated from the later date of either:
- the first instalment date
- the date your balance goes above what you owe
2.Tax Rebate when Leaving UK
If you are leaving the UK to live abroad permanently or you’re going to work abroad full-time for at least one full tax year, you must inform HM Revenue and Customs (HMRC).
Also you need to know the tax year in the UK runs from 6 April to 5 April the next year.
Tell HMRC before you leave
Fill in form P85 and send it to HMRC. Include Parts 2 and 3 of your P45 form – get these from your employer (or Jobcentre Plus if you’ve been claiming Jobseeker’s Allowance).
Send a Self-Assessment tax return instead if you usually complete one, eg if you’re self-employed.
Send a P85 and a tax return if you’re going to be working full-time for a UK-based employer for at least one full tax year.
Sending your tax return
You can’t use HMRC’s online services to tell them you’re leaving the UK. Instead, you need to:
- send your tax return by post
- use software
- get help from a professional, eg an accountant
Complete the ‘residence’ section in your tax return (form SA109 if you’re sending it by post).
You’ll be charged a penalty if you don’t meet the deadline – it’s earlier if you’re sending your return by post (31 October).
What happens next?
HMRC will work out if you’re owed a refund for the tax year you’re leaving the UK.
If you’re non-resident, you don’t pay UK tax on income or gains you get outside the UK. You may be non-resident the day after you leave the UK – this depends on your situation and how ‘split year treatment’ applies to you.
You need to let other people know if you’re moving or retiring abroad, eg your local council so you stop paying Council Tax.
If you have UK income
You may need to pay UK tax even if you’re non-resident, eg if you have income from renting a property in the UK.
The UK has ‘double taxation agreements’ with many countries to make sure you don’t pay tax twice.
You might want to carry on paying National Insurance while you’re abroad if you’re:
- planning to come back to the UK
- going to claim the State Pension later
Please note you can’t claim back any National Insurance when you leave.
Anything you’ve paid might count towards benefits in the country you’re moving to if it has a social security agreement with the UK.
You can claim certain UK benefits abroad, eg Jobseeker’s Allowance if you’re looking for work in a European Economic Area (EEA) country.
If your circumstances change
Contact HMRC if your circumstances change when you’re abroad, eg if you move house or your marital status changes. You’ll need your National Insurance number.
You also need to tell HMRC if you come back to live in the UK.
Visiting the UK
You can visit the UK without becoming resident again – depending on why you visit and how long you visit for.
If you work full-time abroad, you can usually visit the UK for up to 90 days – as long as you work no more than 30 of these days.
You might become a UK resident again if you start new activities in the UK after you’ve left, eg you get involved in a business or buy a new property.