Ahead of the self-assessment tax return deadline, taxpayers are being urged to double check their paperwork after more than two million Brits overpaid an estimated £8.9 billion in income tax in 2024/25.
The self-assessment tax return deadline is 31 January each year. That is also the date taxpayers who pay their tax via self-assessment have to make their first payment.
However, HMRC also operates a ‘payment on account’ system when it comes to filing self-assessment returns. Payments on account are payments towards your next tax bill (including Class 4 National Insurance if you’re self-employed).
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They help spread the cost of your tax by making payments in two instalments. Each payment is half of the tax you owed last year. The payments are due by midnight on 31 January and 31 July.
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But the payment on account system used for self-assessment returns causes millions of people to overpay, according to accountants UHY Hacker Young.
This is because it requires advance instalments based on your previous year’s tax bill – any dip in current earnings leads to a significant overpayment of tax, as this tax was based on last year’s earnings.
For example, if your 2024/25 tax bill was £4,000, you'd pay £4,000 (for 2024/25) plus £2,000 (first payment on account for 2025/26) by 31 Jan 2026. Then £2,000 (second payment on account for 2025/26) by 31 July 2026. And then your next year's bill. This January’s tax return deadline is for the 2024/25 tax year.
Neela Chauhan, partner at UHY Hacker Young, said: “Self-assessment is supposed to ensure people pay the right amount of tax, but for millions it means they are being overtaxed by billions of pounds.”
Am I overpaying tax?
Around 2.6 million people are estimated to have overpaid income tax through the self-assessment system, according to data provided by HMRC to UHY Hacker Young under the Freedom of Information Act. Many are likely unaware they are owed money, the accountancy firm said.
Overpayments made through self-assessment forms are not automatically corrected by HMRC. Taxpayers must identify the error themselves and formally request a refund.
Another reason for income tax overpayments can simply be mistakes made by people filling out the forms, UHY Hacker Young said. Mistakes could be as simple as filling in the wrong salary or not claiming all valid business deductions, like travel or supplies, meaning you pay tax on profits that aren't yours.
UHY Hacker Young is urging people to ensure they take extra care when filling out self-assessment forms and seek professional advice if they are unsure how to do it correctly.
Chauhan said: "Self-assessment taxpayers must check whether they have paid the correct amount. Refunds are not automatic and HMRC will not proactively tell you that you’ve paid too much."
How to claim a tax refund
You may be able to claim a tax refund (rebate) if you’ve paid too much tax. However, you may not get a refund if you have tax due in the next 45 days (for example for a payment on account). Instead, the money will be deducted from the tax you owe.
If you submitted your self-assessment return online, sign in to your online account and check if you completed the section: ‘if you have paid too much tax’. Check the same section if you sent a paper return.
If you completed the section, you’ll usually get a refund automatically. If not, you’ll need to claim a refund through your online account. If you don’t have one, either set up an online account or contact HMRC.
If you’re due a refund, HMRC’s official guidance is you’ll usually get it within two weeks of when you sent your return online or the date on your tax calculation letter (SA302), if you sent a paper return.
However HMRC backlogs mean reclaiming overpaid tax can be slow and frustrating. In some cases taxpayers can wait as long as 18 to 24 months to receive their money, said UHY Hacker Young.
The firm urges anyone completing a self-assessment return to review income assumptions carefully and act quickly, where overpayments are identified.
“If you don’t check your return carefully and follow up, you may never see that money again,” said Chauhan. “Any overpaid tax is essentially a low interest loan to HMRC so should be chased up as quickly as possible.”
Remember, however, HMRC does not send details of tax refunds by email. You can report suspicious emails to them.
