Can I get a tax refund when I stop working?
If you stop working part-way through the tax year, you may have paid more tax than you owe for that year. This is because tax is usually deducted assuming you will earn the same throughout the year. You can often claim a refund of the overpaid tax from HMRC.
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Check what you're owed →The way tax is collected through pay assumes a steady income across the whole tax year. If you leave work, retire, take a career break or are made redundant before the year ends, you may have had tax deducted as though you would keep earning at the same level, which can leave you having overpaid for the part of the year with no, or lower, income.
Whether a refund arises depends on your overall income for the year and any other sources you have. If you start another job or claim certain benefits, that affects the picture, but if your income genuinely drops, the tax taken earlier in the year may be more than you ultimately owe, and that difference can come back to you.
Keeping your P45 when you leave a job is important, as it sets out your pay and tax to date. You can claim a refund from HMRC, and you may be able to do so before the end of the tax year in some cases rather than waiting. Checking your position when your work changes helps you recover any overpaid tax promptly.
How to claim a refund when you stop working
- Keep your P45. Make sure you receive and keep your P45 when you leave a job, as it shows your pay and tax to date.
- Work out your year’s income. Consider your total income for the tax year, including any new job or benefits, to see if you overpaid.
- Contact HMRC. Claim a refund through HMRC, providing your P45 and income details so they can check what you are owed.
- Check the refund. Confirm the amount refunded reflects the tax you overpaid for the part of the year with lower income.
Frequently asked questions
- Why might I be owed a refund after stopping work?
- Because tax is deducted assuming steady earnings all year. If your income drops part-way through, you may have overpaid for the rest of the year.
- Does starting a new job affect this?
- Yes. If you begin other work or claim certain benefits, your total income for the year changes, which affects whether a refund is due.
- Why is my P45 important?
- Your P45 records your pay and tax to the date you left, which helps work out any refund and informs your next employer or HMRC.
- Can I claim before the year ends?
- In some cases yes. If you have stopped working and meet the conditions, you may be able to claim a refund without waiting for the year-end.
MoneyFinder is an independent sign-posting service that helps you find financial support you may be entitled to. We are not a government body and do not provide financial advice. Figures are taken from the official sources cited above and were correct when last checked — always confirm current details on the linked GOV.UK pages.