What Happens If You Overpay Income Tax in the UK?

Introduction

Paying more than his income tax for one's self will always feel like giving an interest-free loan to HMRC. It happens more often than one would care to believe- likely you changed jobs in the middle of the year, had more than one employer, or your tax code simply was not right.

The great news for you: if you have overpaid, you can usually recover that money. This guide dives into the nature of overpayments, the normal course of action for HMRC thereafter, and how you can apply for a refund, minus all the hassles.

Why You Pay Too Much Income Tax

More overpayment happens than some people anticipate. Here are the most common causes:

• Wrong tax code – If your code does not reflect your situation, you may be paying too much.

• Change of jobs – Inaccuracies or delays in updating PAYE records may cause temporary overpayments.

• Multiple income sources – HMRC may apportion your personal allowance to the wrong earner.

• Emergency Tax – Common if you commence a job without furnishing your new employer with a P45 from your previous job.

• One-off income – For instance, redundancy pay or a bonus that temporarily pushes you into a higher tax rate.

How HMRC Deals With Overpayments

Automatic refunds within PAYE

Usually, if you work and are paid under PAYE system, HMRC spot an overpayment after the end of the tax year on 5 April.

Usually, you will receive a P800 tax calculation stating what you are owed. Simple Assessments are normally issued when HMRC believes you owe tax, not when you are due a refund.

HMRC will normally ask you to claim online and get your refund sent straight to your bank account. If, however, you do not claim, they will mail you a cheque after a period.

Adjustments for Self Assessment

After submitting a Self Assessment tax return, any overpayment is generally applied as a credit against your next bill, or else it is refunded to you, once your return is processed.

How to Get Your Tax Refund

If tax refunds are not sent to you automatically by HMRC, then here is what you do with the speediest approach:

1. Check your tax code. Use the tax code checker offered by HMRC.

2. Collect your evidence. This includes P45, P60, most recent payslips; any letter(s), e-mail(s), etc., from HMRC.

3. Online claim — For most PAYE overpayments, use the Claim a tax refund service.

4. Postal claim — If there is no online service for your type of case, then the claimant will have to write to the HMRC with the relevant details and supporting documents.

5. Telephone application — For difficult cases and urgent enquiries, the income tax helpline can be contacted.

Time Period for Refunds

• Online claims — Paid into your bank account within 5 working days, in most cases.

• Postal claims — Can take up to 8 weeks in periods.

• Automatic refunds — Expect payment a few weeks after your P800 is issued (and a cheque will be sent if you do not claim online).

Tip: Have you recently moved? Make sure your address is updated with HMRC to avoid unwanted delays.

Types of Overpayment Occurrences

Example 1: Job change mid-year

Sophie quit her full-time role, with her last day falling in November; she then started working in a new job in December. Because of some wrong assumption made by the new employer over Sophie's personal allowance, she paid too much.

HMRC’s end-of-year check caught that, and Sophie received a refund of £420 in July.

Example 2: Emergency Tax

Because Ali started a season job without a P45, he was put on an emergency tax code and ended up overpaying it.

After his P45 had been processed mid-season, HMRC recalculated the tax and duly refunded £185 to his bank.

Common Mistakes To Avoid

• Not checking the tax code — Small errors can lead to big overpayments.

• Ignoring messages from HMRC — Refunds go astray if your contact details are not up to date.

• Waiting for HMRC to do the fix — Usually they do, but some cases are on you.

Your Rights and Time Limits

You can claim a tax refund up to 4 previous tax years.

In the 2025/26 tax year, that means you can still claim for 2021/22 onwards.

After the window closes, HMRC will not pay refunds for those years.

Conclusion

Overpaying income tax is not the end of the world- but it is money one should not leave on the dining table.

Know why it happens, watch for HMRC’s P800, and use the online claim route where you can. That way, more of what you earn ends up exactly where it belongs: in your pocket.

For personalised estimates of your take-home pay, try our salary calculator.