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When a business or individual pays too much tax in a year they could claim a relief referred to as Overpayment relief.

To be able to make this claim, it must be made in writing within 4 years after the relevant tax year.

To make this claim, certain conditions must be met.

Conditions for Overpayment relief claim.

  1. The claim that is made arising from omission or error in computing capital allowance within the time limit
  2. This relief is not available when there are other tax remedies or statutory claims that could be made.
  3. When a claim was not made within the time deadline and the company should have known by the taxpayer.
  4. HMRC would not accept late amendments to tax returns as overpayment relief.
  5. The claim is subject to appeal at the tax tribunal.
  6. HMRC must not have proceedings for recovery of tax for the amount in question.
  7. The HMRC would not accept relief claims that arose from a mistake in the calculation of the tax due. 

Overpayment relief

 How to Claim Relief from Overpayment relief.

An individual or business that has overpaid tax can take the following steps to claim a relief:

  • A taxpayer must write a letter to HMRC stating their intentions of making an overpayment relief.
  • The taxpayer would have to state the year with the overpayment of tax.
  • The individual or business would explain in their letter the grounds on which the overpayment has occurred.
  •  Must show the total amount of tax and the type of tax.
  • Also, in the letter, the individual would have to explain to HMRC whether an appeal has been made previously in connection with the claim.
  • Finally, the taxpayer should sign the letter confirming the details in the letter is correct.

Other ways of Claiming overpayment.

Amendment of tax returns

An individual or business can reclaim overpaid tax if within the time limit.

The time limit for amending the tax return by a taxpayer is within 12 months after the deadline for submission.

This would be a better option especially if HMRC would not accept overpayment relief because of the conditions stated above.

 Prior year Adjustment.

 The prior year adjustment is a correction of a fundamental accounting error that occurred in the past and was reported on the relevant preceding period.

 When a taxpayer or business has overpaid tax as a result of this error and the time limit for amending this error has passed.

The taxpayer may claim overpayment relief.

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overpayment relief


Making overpayment tax relief could be very helpful and timely if you qualify.

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