Royal London urges taxpayers to double-check income tax

Approximately 460,000 people in the UK chased HMRC for refunds on overpaid income tax in the year 2018/19, according to an FOI by Royal London.

The mutual insurer has urged taxpayers to double-check whether they may have overpaid tax.

Royal London noted some of the reasons that HMRC gives for overcharging people income tax – such as someone changing jobs in the year, or being subject to changes to taxable benefits – which might result in an overpayment of tax.

Royal London’s FOI called on HMRC to reveal how many requests for refunds of interest earned on PPI claims it had received, either in total or by tax year, as well as the total value of these refunds.

“Nearly half a million people tried to get overpaid income tax back from HMRC in the last tax year,” commented Royal London personal finance specialist, Becky O’Connor. “This goes to show it’s a good idea not to assume the taxman is always right about what he says you owe.

“Always check your tax statement for the year and keep a note of any unusual changes to your income that might mean you have overpaid.”

Another reason that the insurer highlighted for those applying for a refund could be over tax paid on interest received as part of PPI compensation payouts.

PPI payments include annual interest of 8% to compensate claimants for the years when they were out of pocket as a result of being mis-sold a PPI policy.

O’Connor added: “If you have received a payout for PPI compensation, it is worth checking the statement for details of any tax paid on the interest element of your refund. If it was and tax was not due because the interest income was within your personal allowance or you are a non-taxpayer, you may be entitled to request a refund.”

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