It is amazing that so many paye tax payers are due a UK Tax reclaim.
It is estimated that some where between a third and a quarter of the UK PAYE employees are entitled to a tax reclaim. Usually these Tax refunds amount to some where between £950 and £1,350 but depends on personal circumstances as each case is different.
What is even more amazing is that the majority of these people have no idea that they are actually due a tax reclaim. Why should they be aware? After all they receive a computer generated pay slip so they think it is must be correct. Of course more often than not it is wrong and some thing like 25% of payslips are wrong.
This happens as the PAYE Tax system is unable to make any real intelligent conclusions as it is solely dependent on the information that it receives. After all it is a massive and complex system and works very well for the average employee most of the time.
Where it is often incorrect is that it is not fed the correct data in the first place. That is like a computer system if you input garbage you get garbage as your output it is simple as that. Where it goes wrong is as soon as you have an exception that it cannot get it correct unless or until it is updated and corrected.
If you are given the correct tax coding and you work a full tax year for the same employer and they apply the correct tax code then you should be correctly taxed. Already there are three variables - you need to have been given the correct tax code - you need to work a full tax year and you employer needs to apply the code correctly.
There are many examples that can give rise to an exception that can usually mean that an employee xed under PAYE is over taxed.
How this arises is as follows:
You start your employment part way through the Tax Year and are on an emergency code or even worse an OT code.
An emergency code means that you would not be given your full personal allowances in the Tax Year. An OT code would mean that you would be given no personal allowances at all and would have your income taxed at basic rate.
If you leave the UK part way through the Tax Year again you would not have been given your full personal allowances in the tax year
A classic example could be some one who starts halfway through one tax year and then leaves the UK in the second tax year.
Or where some one leaves the UK part way tgrough a ta x year and then comes back part way through the following year usually to be taxed on an emergency basis. Quite often they will be entitled to a tax refund for the year when they left the Country and a refund for the tax paid in the year when they returned to the UK.
This can often happen with students who work outside their term time and are very often due an Income Tax refund.
Recently I saw one case where the refund actually received was in excess of £4,400 and this covered four tax years. In addition the current years PAYE code was amended resulting in a Tax refund in one month of some £900 so in total that's a refund £5,300.
This refund arose as an incorrect code number had been issued by the Inland Revenue restricting the personal allowances when in fact full personal allowances were due.
So it is well worth checking with Paye Reclaim to ensure that you are not due a refund.
