Most people associate tax returns with watching money trickle out of their bank account. However, more often than not, submitting your Self Assessment could actually result in the process of a tax rebate.
Often this is the case when if your circumstances have changed. Below are some of the instances in which you might be entitled to a rebate:
Retiring from self-employment
If your self-employment career is coming to the end and/or you consider yourself to be retired, there is a high chance you might be due a tax rebate.
This could be the case if your payment on account made for the current tax year was too high compared to the actual income generated. So, if you’ve recently retired, it’s worth investigating whether a rebate is potentially awaiting you.
Switching from sole trader to limited company
If you’ve recently made the move from sole trader to a limited company, the way your income is taxed will have changed as you move from self-employment to salary and dividends. In terms of tax benefits, running a limited company is decidedly different to a sole trader venture, and you could reap the rewards of a rebate if you haven’t done so already.
A reduction in self-employment profits
There are lots of other reasons why you might be due a rebate. Perhaps you had a windfall in the previous year which drove a spike in your tax bill. Maybe you’re taking a step back from your profession to focus on family or other commitments.
Switching Jobs
Once you leave a job,
your employer must give you a P45 form (the law demands it). This form will
show you the total amount of tax paid to HMRC for the previous tax year. Often
employers do not take over the correct tax codes or brought forward earnings
which could result in overpaying tax.
You overpaid tax on your savings account interest
You can only be charged a tax on your savings account interest if the amount exceeds the set rate. The current personal savings allowance is £ 1,000 annually; meaning you pay tax only if your interest exceeds this amount annually. Since most students fall under basic pay, it’s quite unlikely you exceed the personal allowance rate. However, most banks automatically deduct a 20% tax on interest, you need to keep track of this and make sure you don’t lose money on undue deductions.
