Telling the truth about SME life today

How Long Does It Take For HMRC Tax Refund To Go Into Bank?

Waiting on Tax Return

Part of how a country makes money is by taxing its citizens and adjusting for income. However, when you end up paying too much tax, usually through a change in employment status, you are entitled to a tax refund.

However, many of our viewers ask how long a tax refund is supposed to be, with many believing they’ve missed their window entirely. Today, we’re building this blog to ensure that everyone is on the same page when it comes to tax refunds, detailing general guidelines, factors that affect them, and how to ensure all is okay with your tax return.

HMRC Tax Refund Processing Times

The typical time that it takes to get a tax refund from HMRC is not set in stone. The following factors are what decide how long you’ll wait.

  • Method Of Filing – There are two ways to get ahold of your tax return.
    • Self-Assessment Tax Return – This method involves going through a self-assessment of your taxes to work out your tax affairs. In the process, it should become evident whether or not you’re owed a tax refund. You can expect your repayment issued when HMRC decides if you’ve overpaid. This is not how many people do their taxes, though many that do tend to be business owners and have help.
    • PAYE Refunds – If you’re employed and pay tax through “Pay As You Earn”, your employer will deduct income tax from wages throughout the tax year. If too much tax is withheld, then you’re entitled to a refund. Overpayment is often found through their automated processes, though typically months later.
  • Online vs Paper – Submitting your tax return through HMRC’s online portal is faster. It delivers instantaneously, unlike with paper, and heads directly to the person it needs to go to through their system, rather than entering from an outside system (mail). This efficiency is what gets you quicker responses.
  • Time of Year – Some periods are peak for HMRC, with their highest volume of tax returns occurring around January. This causes bottlenecks and other logistical issues that see processing times slow down dramatically, resulting in even simple refunds taking much longer.
  • Complexity – Not every tax refund is a simple one. For instance, if you have multiple income sources, the chances for overpayment rise dramatically. All aspects have to be reviewed, as many different situations can call for different tax situations.
  • Security Checks – Security checks are in place to ensure that all money passing through HMRC is done with correct authorisation and full protection. It’s because of this that many security checks are done at random, requiring the provision of further information to continue the process. Usually, they will ask for a series of simple personal details, such as address, date of birth, etc.
  • Amended Return – This can occur when you have to change details that you’ve found are false after submitting.

 

HMRC Taxes

Tax Refund Timelines

For many, Tax Returns are something that appears unexpectedly as a result of the PAYE system discovering and actioning it. Significant overpayment results in a repayment issued out.

  • Initial Acknowledgement – After you submit your tax return, whether online or via post, HMRC should send an acknowledgement of its receipt. Online, this submission is received and acknowledged within a day or two, but paper acknowledgements can take far longer.
    • PAYE Refunds – PAYE refunds are typically issued within a few weeks of being issued, barring other factors interfering.
    • Self-Assessment Tax Refund – If your taxes are straightforward, and you submit early, you can expect the return to be around two months. Some, however, report waiting up to three months at times.

 

Minor Refunds

Minor refunds are considered an exception by HMRC. Instead of ensuring repayment is issued with the overpaid amount, they instead deduct what they owe from future bills. This frees up a lot of administrative work for HMRC.

How Is A Tax Refund Issued?

There are two common ways to issue a repayment:

  • Bank Account Transfer – A transfer from HMRC’s bank account to yours is the most common way. They will of course require your bank details, but it’s straightforward after that – requiring a few days to show up in your account.
  • Cheque – Cheques can take longer, though nowhere near as long as they used to. If you have access to an online bank account, you may have access to software that can upload the details of the cheque. Regardless, you still need to receive it and wait for a couple of days.

 

How Do I Track My Tax Refund?

There are two ways:

  • HMRC App and Website – Both request login details and require internet, but these are some of the best ways to get updates. It will log the live status of your tax return but may require contact for specifics.
  • Phone – You can contact HMRC by phone and ask them directly for a status update. This can take a while, as it may involve waiting in telephone queues, which are considered highly outdated – but if you ensure to make the call during low activity times, you will also have the opportunity to ask a range of questions at once, instead of having to look for answers individually.

 

Tips For Getting Your Tax Refund On Time

Before we close, here are some tips for getting your Tax Refund on time:

  • File Early – This requires you to know that you’ve overpaid tax. If you suspect as much from your earnings or other knowledge, act early. HMRC prioritises processing returns received earlier within a tax year, essentially giving you first-class tickets.
  • Accuracy – Ensure that all of your information is correct. Double-check the figures in particular when going over income, tax relief, bank details etc. These can cause huge delays if left uncorrected.
  • Include All Information – HMRC is comprehensive with the requested documentation. Some of this includes your P60, P45, and account statements.
  • Respond Immediately – HMRC’s priorities change. If you wait too long, you’ll find that your spot was given to a reserve and you’ll have to wait.
  • Update Details with HMRC – Even if every other piece of advice was like background noise, this is the one that often gets people in the most trouble. Some Tax Refund money remains undeposited simply because the letter and cheque went to another address. Ensure your details are accurate to speed up your return.

 

Tax Relief

Conclusion

Overall, a Tax Return is likely something that will not require prompting. Nonetheless, it’s always worthwhile to check and be ahead of the curve.

FAQ: I have never filed a tax return – do I have to? 

For more than 80% of UK Residents, no. Most people are on what’s called a PAYE scheme. This means that your employer calculates and deducts your taxes for you in your income through their infrastructure whilst giving you an overview of it. If you’re unsure, ask your finance department. 

FAQ: What files should I keep for taxes? 

Tax ItemRecords to Keep
IncomePayslips, P60, P45, bank statements, invoices, receipts for freelance work, dividend statements, interest certificates, pension income records
ExpensesReceipts for work-related expenses (travel, supplies, etc.), invoices, charitable donation receipts, medical expense receipts
InvestmentsBrokerage statements, records of capital gains/losses, cryptocurrency transaction records
PropertyMortgage statements, rental income and expense records, property tax bills, home improvement receipts (if applicable for capital gains calculations)
Business (if applicable)Invoices, receipts, bank statements, payroll records, tax filings

FAQ: How do I write a self-assessment report?

If you choose to have a wider overview of your finances by going through a self-assessment report, you’ll have to do the following preparation:

  • Register an SA Account – Register an SA account with the HMRC. This is the platform you’ll use to get your SA Return.
  • Gather Information – Collect records of your income and expenses, as well as your national insurance number and any previous tax returns. The following should cover what you need:
    • Income Records – P60, P45, bank statements, self-employment income records, pension statements, investment income records.
    • Expense Records – Receipts and invoices for business expenses that you can write off on taxes.

 

Online Report

If you want your repayment issued through online reporting, then you have several steps to follow:

  • HMRC Online Account – Create your government gateway account and access the online services, or simply log in if you already have an account.
  • SA100 Form – Your SA100 form is the main one you’ll fill out. Provide the requested details of your income, allowable expenses and all tax relief.
  • Supplementary Pages – You may need to gain additional forms for some income types, such as your property or foreign income.
  • Calculate and Submit – HMRC will calculate your tax liability. Review it and if you accept it, submit it.

 

Paper Report

  • Request the Forms – You will have to request the SA100 forms to be sent through the mail. This includes any necessary supplementary forms.
  • Fill out – Fill the forms out. Take it slow, as you don’t have access to a backspace button, and any egregious mistakes may not be forgiven when you send the form back.
  • Submit – Submit the completed forms to HMRC by the deadline or risk delays.

 

FAQ: What legislation backs the right to tax returns?

Several acts ensure the right to tax returns and are not consolidated into one piece of legislation like the GDPR. They are made up of a great deal of acts made through parliament, such as the following: 

Tax ActYearAssociated Right(s)
Income Tax Act 20072007
  • Defines income tax
  • Sets tax rates for different income types (e.g., salary, savings interest, rental income) 
  • Establishes basic personal allowances (tax-free income threshold)
Corporation Tax Act 20102010
  • Defines corporation tax for businesses 
  • Sets the corporation tax rate 
  • Establishes rules for calculating taxable profits 
  • Allows for specific business reliefs (e.g., capital allowances for equipment)
Value Added Tax Act 19941994
  • Introduces Value Added Tax (VAT) 
  • Sets VAT rates
  • Establishes rules for VAT registration and accounting 
  • Enables VAT exemption or zero-rating (on applicable services)
Capital Gains Tax Act 20082008
  • Defines Capital Gains Tax (CGT)
  • Sets CGT rates 
  • Establishes annual CGT exemption allowance 
  • Allows for reliefs such as Entrepreneurs’ Relief
Inheritance Tax Act 19841984
  • Defines Inheritance Tax (IHT) on transfers of wealth after death 
  • Sets IHT rate 
  • Establishes Inheritance Tax threshold (tax-free amount) 
  • Allows for reliefs such as spousal exemption
Self Assessment Act 19941994
  • Establishes the self-assessment system for reporting income and calculating tax liability 
  • Grants taxpayers the right to claim tax reliefs and deductions they are entitled to 
  • Allows for appeals to HMRC decisions on tax assessments

FAQ: What are some impacts that legislative changes can have on tax returns? 

The impact that these changes can have on tax refunds can be huge. New laws are introduced often that adjust tax rates and allowances, as well as relief measures that directly contribute to how much a taxpayer will owe, as well as any potential refunds. 

Here’s an overview of some recent legislative changes:

  • Threshold Adjustments – The threshold for paying the higher tax rate of 45%, for example, has been lowered from £150,000 to £125,140 for the 2023-2024 tax year. This can affect tax calculations for higher earners, potentially resulting in higher taxes. This may seem minor, but if you’re in this tax bracket, this may leave you questioning whether your recent tax was right. 
  • Deductions and Credits – Governments may introduce new deductions or tax credits. This results in some purchases being more attractive, such as an electric vehicle that could reduce your tax liability. 
  • Reporting Requirements – Legislative changes can introduce new forms, schedules etc. This could change how you will approach receiving your tax return, as you’re likely going to have to accommodate more information. 

Trending

Topic

Related Stories

More From

Most Read

Trending

If you enjoyed this article,
why not join our newsletter?

We promise only quality content, tailored to suit what our readers like to see!