Posted by admin on November 11, 2017 in Tax

You might have asked your self this question before. What is a tax rebate.
The phrase tax rebate refers to a tax refund. That is, hmrc returns cash its already collect as tax from a tax payer.This article takes a look at tax rebates for employees, sole traders and companies.

Tax rebates for employees

Each employee on PAYE should receive an annual P800 tax calculation letter. This letter will often confirm where Hmrc has calculated an over payment of tax due to reasons like taxcode changes, periods of un employment, and other unexpected errors. The letter should indicate how the tax rebate should be collected or claimed. Much of the time, for an employed person, the rebate will be given via the taxcode resulting in an adjustment to their PAYE taxes.Employees can claim a tax refund on costs incurred on things like uniforms for their work. To process the tax rebate, the employee can fill in a P87 form in paper and post it to HMRC or file a claim online via government gateway.

However, if the employee is already filling a tax return, they’re required to claim for expenses on the tax return.Typically, these would be people with extra non PAYE income, or higher rate tax payers.
If the claim exceeds £2,500, the employee is required to make the claim via a self assessment tax return. If the employee in not registered for self assessment, the employee has to register in order to claim the tax rebate.

Tax rebates for Self employeds and Sole traders

For self employeds, sole traders, partners in partnerships or other persons who fill tax returns, tax rebates have to be claimed via a self assessment tax return. Generally
only expenses incurred in the period being taxed for the purpose of self assessment, can be claimed via the tax return. Expenses which were not claimed in previous years have to be the subject of a separate letter to HMRC. However , losses can be relieved

Tax rebates for Self employeed individuals under CIS

Construction industry sole traders and self employeds are required to fill in a self assessment tax return. Due to the fact that their income generally suffers a flat 20 percent deduction, they will often get a tax rebate after they file their tax return. The main reasons are usually expenses and the tax free personal allowance. However, the higher their income , the more complex the computation is, an the less likely a rebate is.

Tax rebates for companies

For incorporated businesses ,a tax refund can arise when losses disclosed in the most recent accounts are offset against the prior year’s taxable profit. A claim for tax relief is made in the corporation tax return . Where a company,is itself a contractor in the construction industry, it is likely to suffer CIS deductions. Reclaiming the deductions may be possible where the taxable profit of the company indicates a tax amount due thats less than payments taken from the companies income.


Tax rebates are a refund of tax paid by HMRC where the tax payer has paid more tax than is due at that time. Tax refunds are also available when loss relief is suffered by a business corporate or sole trader in the normal course of business. Business Loss relief is not available to employees, however employees can make a claim in writing for employment expenses not claimed in previous years. Note that while every effort is made to keep this article accurate, as at May 2016, it should not be taken to be profssional advice at any time. Furthermore, income tax law changes constantly.

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