Don’t worry, you’re not on your own if you find yourself feeling confused about tax returns. You can make the process a little easier however by using an online tax refund calculator.
What exactly are tax refunds anyway?
Tax refunds exist for people who are overpaying on their income tax. There are many ways in which you can qualify for a tax refund (otherwise known as a tax rebate), but the most common reasons are if:
- your tax code is incorrect.
- you’re self-employed working under the Construction Industry Scheme (CIS) and incur expenses as a result of your services.
- you’re paying expenses on work related items.
- you’re leaving the country.
- your business has closed and you’ve already paid tax on your account.
What’s the CIS?
It’s relatively simple to understand. For people in the construction industry, the CIS is a flat rate of tax of 20% you pay on your earnings. Both contractors and subcontractors need to be registered on the scheme for it to function. And like all other self-employed workers you have to submit an annual self assessment form to the HMRC with all your expenses and invoice details.
The tax refund calculator – a breakdown
For many people, working out how much tax they might be owed is a daunting prospect. When really it’s not that bad.
Start by going online and using a tax refund calculator. It’s easy to use and works out accurately how much tax you’re potentially owed. The layout of most tax refund calculator will ask for the following details:
- Tax year you’re claiming for.
- Gross pay.
- Tax paid.
You’ll need to click on the ‘calculate’ button after you’ve filled in the required details.
Are tax refund calculators easy to find on the web?
The answer is yes – very easy. A whole host of websites provide free tax refund calculators. A quick search online will give you a long list of websites offering their tax refund services with the calculator included. Here’s a few things to look out for:
• Many firms will present their calculators as a free service. This is irrelevant as all calculators are free anyway.
• Do your figures on two different calculators to make sure that both the calculators are agreeing with each other.
How do I claim for a tax refund?
HM Revenue and Customs deal with all tax related issues and, depending on your circumstance, you should contact them if you want to make a claim. Things they will take into consideration are:
• If you’ve recently become unemployed or retired.
• How long ago your claim is referring to.
The final word
Staying on top of your tax is relatively simple as long as you are aware of how the system works. It can be very easy to curl up into a ball and deny tax even exists sometimes. Don’t do it. Do your research, keep on top of your accounts and you’ll be just fine.