With the cost of living on the rise, people up and down the country are looking for ways to keep costs down, from turning the radiators off to cancelling streaming subscriptions. But tax refund experts, RIFT Tax Refunds, are spreading the word that there might be a way of saving money without having to sacrifice comfort or lifestyle: tax refunds.

Paying tax is supposed to be simple and for most people it’s all done automatically through the Pay As You Earn (PAYE) scheme, although those with self-employed status have to submit a self assessment form each year in order for HMRC to crunch the numbers and figure out what they owe.

Even if you’re on PAYE, HMRC’s calculations aren’t always accurate and you can end up paying more tax than you actually owe.

But what is a tax refund and why might you be owed one?

Here’s a quick run-down of the main things you need to know.

Incorrect Tax Code
To calculate how much tax a person owes, HMRC assigned everyone their own tax code. However, tax codes change over time and don’t always keep up with your situation. This can result in you overpaying tax.

Your tax code will be on any letters you’ve had from HMRC, and if you notice it has changed, do not ignore it! Get in touch with HMRC and ask why it has changed and whether you are still paying the correct amount of tax as a result. HMRC aren’t in the business of cheating, so if they’ve made a mistake they will happily reimburse you.

Previous jobs
The tax man can get confused when you move from one job to another, or move from PAYE to being self-employed. While HMRC will always try to follow what you’re doing and tax you correctly, they can only do so if they have all of the required information. If you suspect you’re overpaying tax due a job change, you can contact HMRC and double check the details they have for you. Alternatively, you can hire a tax refund speciality to handle it all for you.

Pensions
Pensions and tax have a tricky relationship. While there are good measures in place to make sure you don’t overpay there are lots of intricate rules and caveats which can complicate things without you noticing. It’s worth talking to someone who knows the tax rules inside-out to make sure you’re not losing out.

Annuities
An annuity is a financial product that pays out a fixed stream of payments, primarily used as an income stream for retirees. If your annual income is below your personal allowance, you should not be taxed but sometimes you still are.

Redundancy
Redundancy payments are taxable but overpayments are quite common. If you think you’ve overpaid, called HMRC and they will double check for you and, if appropriate, send you a quick refund.

Self Assessment
This might be the most common reason for tax refunds because lots of people filling in self assessment forms are not financial experts. This makes it all too easy to over or under pay income tax. HMRC usually catch the mistake quickly and send an automatic refund. If not, you can call and request one. To avoid complication, you can get an expert to fill in your self assessment for you.

Savings interest and PPI
You’re allowed to earn a certain amount of interest on your personal savings without paying tax on it. The threshold depends on your income. If you think you’ve been taxed too much or too early, you might be owed a refund.

Income from abroad and earning while overseas
If you’re a UK citizen but earn some of your income overseas, it complicates tax matters. You might even end up paying tax here and abroad on the same income. It’s best to speak to a tax pro to make sure you’re not overpaying.

Work expenses
It’s well-known that self-employed people can claim money back for their business expenses, from travel to phone bills. But PAYE workers can claim for expenses, too. You just need to make sure you’re keeping a record of expenses and have proof that they’re related to your work.

It’s important to note that even if your employer already contributes towards your business mileage or travel expenses, if it’s less than the full AMAP rates, you are still entitled to claim the difference back as a mileage tax rebate.

Are you eligible for a tax refund?
As you can see, there are lots of reasons you might be owed a tax refund but it’s not always easy to figure it out on your own. You can complete a simple questionnaire to find out if you’re eligible here. It takes a few minutes and is completely free.

CEO of RIFT Tax Refunds, Bradley Post, commented:

“HMRC has a lot of taxpayers to keep track of and while they’re not in the business of deliberately charging, mistakes are part and parcel of life. However, the complex rules in place to make sure everyone contributes an appropriate amount to the economy can make it hard to know whether or not you’re paying the right amount.

“But with the cost of living rising so dramatically, it’s more important than ever to double-check that you’re not paying more than you rightfully should. While certain professions or aspects of working life are more likely to be due a refund, you never know just how much you might be owed. Especially given the fact you back legally backtrack a claim for up to four financial years.”