Tax Refund

[kevgerlan]

Hi, first things first. I was made redundant in October of 2008, and would like to know if I am due a refund for this? My second question is as follows, I was Self employed from March 2009 up until May 2010. Throughout my time of self employment, My running costs were usually higher than any profit, My Self Assessments were all "in-credit" so to speak. Since August 2010, I have been on JSA. Am I entitled to a refund for any of these periods? Any help will be gratefully appreciated.

[factor-fiction]

You need to ask the HMRC to look at your case

[Skyline D]

For 2008/09 you'll have paid tax up to October 08 and may or may not have done thereafter depending on how much taxable benefit you were getting. You were also self employed at the back end of it but the period is negligible. Your redundancy payment presuming you got one would be tax free. Short answer to the first question then is no-one can know without more info. You might have paid too much tax but you might not have. If you did then generally I'd expect you to have received a refund by now but it might have been missed.

You can't obtain any refunds for loss making periods of self smployment. The losses are available to releive against future profits but you've since ceased so they are just lost. Inherently by definition, you can't obtain a refund of tax you haven't actually paid. To get a refund of anything you have to have paid it first. You hadn't paid any tax.

[1eyedjack]

Without number-crunching it there are no guarantees, but it is likely that you have overpaid tax under PAYE for 2008-09. Because the PAYE system gives your personal allowances "on the drip" and you are entitled to a full year's personal allowance.

I should correct Skyline D re. self employment losses which is quite wrong. Check out sections 64 and 72 Income Tax Act 2007
http://www.legislatio...pga/2007/3/section/64

http://www.legislatio...pga/2007/3/section/72
Be careful of time limits - you have until 31 Jan 2012

Be careful of qualifying conditsions (see section 28)

[factor-fiction]

I agree with 1eyedjack regarding the tax position for 2008/09, although I'm not sure why any refundd didn't happen automatically at the end of that tax year.
I'm not sure though that 1eyedjack is right in saying skylineD is wrong concerning refunds for loss making periods- has 1eyedjack misunderstood what skylineD was saying?

[annie0000]

Quite a few years ago I was in a similar position as kev in regard to being made redundant part through the year, I then temped for a while and when I secured a permanent job, i stopped temping and had about a month or so off with the kids before starting my new job. I never signed on for that period as there was little point. It took about 3 years for me to get back my overpaid tax, particularly as I had no evidence - other than no money coming into my bank account and plenty going out! - that I hadn't been working - telling them I was living of my vast personal wealth didn't seem to help. Anyway, for me the process of getting the tax back was not automatic, I had to claim and it wasn't quick!! It didn't help that my new employers lost my p45 and I was on week 1 tax for a while until a p46 was sorted out.

[1eyedjack]

I may have misread Skyline D in which case apols of course.
In my experience PAYE refunds are not automatic. They have to be claimed. Typically sending the P45 to the tax office would be sufficient. Otherwise file an R40 if not on SA.
As for the losses, Skyline D suggests that the losses have to be carried forward and are lost on cessation. I disagree. By Jan 2012 he could enter a claim (s.68 permitting) for the 2009-10 loss to be set against the 2008-09 other income (s.64) or against 2006-07 other income (s.72) (with surplus loss if any being relieved against 2007-08 etc), Whether a refund arising from such a claim does, as pointed out, depend on there having been paid some tax in those years to refund. Treis at least some indication that there was tax paid in 2008-09

[factor-fiction]

Thanks for the clarification regarding whether refunds are automatic. Maybe a better description would have been 'straightforward'- just send in a claim. It was simple in my case.
I know little about tax for self employed. I'm just a little surprised that a self employed person who makes a loss can then et a tax refund by offseting the losses against income earned from earlier employment (ie before he became self-employed)

[Skyline D]

PAYE refunds can happen automatically but won't necessarily do so. It's worth checking in such complicated circumstances.

As for the loss relief. Apologies, I wasn't conscious there'd been a provision introduced to allow early year losses to go backwards. That wasn't allowed when I trained and I don't specialise in tax now though I still do bits and pieces here and there. Thanks to 1eyedjack for the correction.