How to get a tax refund if you're self-employed

Think you’ve paid too much tax? Self-employed people may be entitled to tax refunds just like regular employees – but the process for claiming the money back can be different.

If you’ve made a mistake on your tax return, or if you think you’ve overpaid, read our guide on how to claim a tax refund.

Are self-employed people eligible for tax refunds?

Self-employed people can claim tax refunds just like regular employees. If you’ve paid too much tax, for example, because you made a mistake on your tax return, you may be entitled to some money back. However, HMRC deals with tax refunds for Self Assessment taxpayers differently.

How to get a tax refund as a self-employed person

Self Assessment taxpayers claim tax refunds through the Self Assessment process. This means that any overpayments will be dealt with once HMRC has received your next tax return.

When completing your return, you should be told that you have overpaid. You can then choose how you’d like the money to be paid back to you – for example, by bank transfer. Alternatively, you can put it towards your next tax bill.

Sometimes, however, the opposite may be the case – you may have been paid too much, for example in tax credits, and will be required to make a repayment to HMRC.

If you’ve received a tax credit overpayment but are also entitled to a separate refund, HMRC will deduct the amount you owe from the amount to be repaid to you.

How to get a tax refund if you’ve made a mistake on Self Assessment

It’s not uncommon for self-employed people to make mistakes on their Self Assessment tax return, which results in them paying too much tax.

If this applies to you, the first step is to correct the relevant tax return. You can do this through the government’s Self Assessment portal – the same place that you completed your return in the first place.

Again, you may receive the refund either as a payment to your bank account, or as a deduction from your next tax bill.

To make a correction to your tax return:

  1. Log into your HMRC account
  2. Navigate to your Self Assessment account
  3. Click on ‘More Self Assessment details’
  4. Click ‘At a glance’
  5. Select ‘Tax return options’
  6. Choose the tax year you want to amend
  7. Make the amendment directly in the tax return form

Remember – you may have to provide supporting evidence if you want to correct a tax return. As always, it’s important that you keep full and accurate records of your business finances.

Read here for more information on tax return changes.

Is there a time limit for correcting a Self Assessment tax return?

Normally, tax returns can only be corrected up to 12 months after the Self Assessment deadline for the relevant tax year. So, if you made a mistake on your 2016-17 tax return, you would normally only be able to amend it up to 31 January 2019.

However, there are some circumstances in which you may still be able to claim your refund even after this deadline has passed.

HMRC operates a scheme called ‘overpayment relief’ for these situations. However, the process for claiming a refund under overpayment relief is different. Here, you’ll need to contact HMRC directly and explain the mistake and how it was made.

This requires you to write to the Revenue, using the contact details on your most recent letter from them. You should explain the mistake, and make sure you provide supporting evidence to back up your claim – for example P45s if you moved from employment to self-employment.

Finally, make sure you get proof of postage from the Post Office when you send your letter.

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