Five reasons why you may have paid too much tax (and how to get a refund)

Money

Have you paid too much tax? Some taxpayers may have overpaid income tax in recent years without realising it.

According to a Freedom of Information request submitted by accountancy firm UHY Hacker Young, 5.6 million people across the UK overpaid a combined £3.47 billion in the last tax year, with an average overpayment of £689.

HMRC does not always notify individuals of overpayments or automatically issue refunds, so checking your position can be worthwhile.

Timing is an important factor. You can only claim back overpaid tax for the last four tax years. In 2026, the 2022 to 2023 tax year is approaching the deadline, so it’s worth reviewing this sooner rather than later.

To help you work out whether you may have overpaid on your tax, Stefani Williams, Partner at Holden & Partners, shares the five most common ways people pay too much, and how to get a refund.

1) Your tax code may not be correct

Nearly one in five UK adults has never checked their tax code, and many people are unsure what it means. An incorrect code can affect how much tax is deducted from your pay, and it is not always flagged automatically.

Three quarters of people who discovered they were on the wrong code had overpaid HMRC by an average of £689. Your tax code appears on your payslip, the most common code is 1257L, which reflects the standard £12,570 personal allowance. If yours looks different and you are unsure why, you can check your personal tax account at gov.uk or contact HMRC.

Tax codes can change after events such as a job move, starting to draw a pension, or receiving workplace benefits. It’s something that’s easy to overlook.

2) You may be missing out on Marriage Allowance

Over 2 million eligible couples have either not applied for Marriage Allowance or are not claiming backdated amounts, according to HMRC. The allowance allows a non taxpayer to transfer £1,260 of their personal allowance to their spouse or civil partner, potentially reducing tax by up to £252 a year.

Claims can be backdated for four years, meaning eligible couples could receive up to £1,256.

To qualify, one partner must earn below £12,570 and the other must be a basic rate taxpayer earning between £12,571 and £50,270. Claims are made by the lower earner at gov.uk and typically take a few minutes.

This is a relatively simple allowance, but it’s often missed.

3) You may have paid too much tax on pension withdrawals

When taking a flexible lump sum from a pension, HMRC often applies an emergency tax code. This assumes the same amount will be withdrawn every month, which can result in a higher tax deduction than expected.

This can usually be corrected by submitting the appropriate form through gov.uk, with refunds processed within a few weeks rather than waiting until the end of the tax year.

We often see this when people access their pension for the first time. The initial tax deduction can look higher than expected, but it can usually be reclaimed.

4) You may not have claimed work related expenses

If you pay for certain costs yourself for work, such as travel to temporary workplaces, tools, professional subscriptions, or uniform cleaning, you may be able to claim tax relief.

Claims can be made directly through gov.uk at no cost. In some cases, claims can be backdated for up to four years.

People sometimes assume these costs are either covered by their employer or not worth claiming, but over time they can add up.

5) You may have overpaid tax on savings interest

As savings rates have increased, more people have exceeded their Personal Savings Allowance, which is £1,000 for basic rate taxpayers and £500 for higher rate taxpayers.

If tax has been deducted incorrectly, or reported inaccurately through self assessment, it may be possible to reclaim it using form R40 via gov.uk.

With higher savings rates, this is becoming more relevant for more people. It’s worth reviewing if you have a larger cash balance.

Claims can be completed through your personal tax account at gov.uk. HMRC will not contact individuals about refunds by text or email, so any such messages should be treated with caution.

The common theme is that these things don’t usually correct themselves automatically. Taking a little time to review your position can make a difference.