How unemployed can claim tax rebate?

Claim a rebate if you have been made redundant recently or lost your job mid-way through the tax year. One can calculate the income tax over the full year. You may not earn much if you lose your job before the tax year ends.

Thus, it is highly likely you may have paid a high amount as tax. For example, if you earn £25000/ year with no other side income, you may claim a free tax allowance of £12570 in the tax year. You then pay 20% of the basic income tax rate on the remaining £12430 of the income. Thus, you pay £2486. The authority usually likes the person to pay this amount in instalments of £207/ month. You pay this amount every month throughout the year until your income remains unchanged.

In the same situation, if the person gets unemployed or made redundant for six months in the very tax year and remains unemployed until 6 months, their earnings total £12500 within the tax year. It is just within the tax allowance.

It implies you do not have to pay any income tax on annual earnings. It implies you do not have to pay anything during that tax year. It is for those who pay £207 monthly unless they get redundant. They may be eligible for £1242 as a tax refund. To claim, get the job within the same tax year.

Who can claim the tax refund legally?

If you are out of work and made redundant before the end of the tax year and were previously a taxpayer, you can claim a tax refund. The amount you get as a tax refund may vary as per your earnings, tax contributions or a number of income sources. It also depends on the existing status of the person. If he is still out of work, he may qualify.

How long do you have to be unemployed for to claim a tax rebate?

You must be unemployed for at least 4 weeks from the unemployment date to claim your tax rebate. Apart from this, meet the below criteria:

  • You should not be claiming taxable state benefits within those 4 weeks
  • Retired but do not get a pension from an old employer
  • Cannot go back to work or do not expect it anytime sooner
  • Switch to a full-time student

Be mindful that one cannot claim a tax rebate if still registered as employed with the employment firm. Contact the company and ask them to report your status to HMRC. The company will have to send your find pay and clear the tax details.

The situation gets problematic for people not leveraging any benefits. If you have not been claiming any taxable state benefits, leading life as an unemployed can be struggling. Depending on your loved ones for minimal survival needs, is not you?

You can avoid it and cater for expenses independently by leveraging affordability loans with no credit check from a direct lender hassle-free. You do not have to stress over the debts to your loved ones. Instead, finance your needs despite low income or finances without troubling your bottom line. These loans grant the individuality to qualify without encountering any mark on the credit report.

Moreover, if you meet the eligibility criteria for the tax rebate, you can exercise more flexibility while managing survival needs.

 Ways to Claim tax rebate as an unemployed

Calculating the amount you owe is one of the most important parameters to begin with. If you are confused, contact HMRC. It will help you calculate the amount on your behalf. Before approaching the same, you should be ready with the documents required.

You need to provide documents like a salary slip (the last one you received), proof of tax payments, and bank statement copies of your transactions. It reveals your income sources. Here are some ways to claim tax rebate as an unemployed:

1) Analyse the aspects you can claim your tax rebate

As an employed worker, you be paying taxes through PAYE.  You pay too much tax. The reason for this can be anything. You may qualify for a rebate in the following circumstances:

  • If you work less than the complete year
  •  You work on a casual basis
  •  If you are a student working on holidays

You may receive the tax rebate in any of these situations. It is because you may have received only a part of the tax-free allowance instead of the whole allowance payment.

2) Identify the current government benefits

You may claim your refund from the Benefits Office if you use any taxable benefit. The tax you pay impacts the overall owed payment. In this case, you would need to file a P45 form. It states that your employer knows the tax code to be applied on the first paycheck.

If you delay sending this to your employer, you may pay too much tax. Your new employer will refund the tax payments through PAYE. Give them parts 1 and 2 of the Benefits office claim application to claim your tax refund. They will release it after authentication.

3) File a form P50 if employed for over 4 weeks

Using a P50 form is one of the ways to claim overpaid tax payments from HMRC during unemployment. You can claim it in any of the circumstances mentioned above after 4 weeks of unemployment.

The P50 form helps an unemployed claim a repayment on tax rebate in th tax year. You can claim it as an initial unemployment rebatement after you stop working. Tax rebatement will be made up to the date if you submit the form with the P45 form.

You can only use the P50 form in the following circumstances:

  • Retirement
  • Employment exceeds a period of 4 weeks
  • Do not claim a job allowance
  • Do not claim taxable capacity benefit
  • Do not claim a careers allowance
  • If you do not claim contribution-based employment or support allowance
  • A self-assessment tax return
  • UK income if live abroad

If your circumstances do not match these or suit your financials, you can rely on loans for the unemployed as the next best alternative. It may help you finance your needs for up to 3-4 months with an affordable and flexible payment structure. 

These are also helpful to finance any costs between the legal process of getting your tax rebate.

Bottom line

These are some ways to claim your tax refund after unemployment. It would help you survive the phase without many financial constraints. Identify the eligibility criteria and analyse your circumstances. You may get a tax refund if you overpaid on taxes previously or in your employment years.

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