Tax refunds in London follow the same rules as the rest of the UK, but the amount you receive depends entirely on how much you overpaid

There is no standard refund amount. The HM Revenue & Customs (HMRC) calculates what you owe based on your actual income and tax code for that year, then compares it to what you already paid through PAYE (Pay As You Earn) or self-assessment. The difference — if you paid too much — is your refund. Someone earning £25,000 might receive £400; someone earning £45,000 might receive £1,200. The size of your refund tells you how much your employer or the tax system overtaxed you, nothing more.

The most common reason for overpayment in London is a mismatch between your tax code and your actual circumstances. If you changed jobs mid-year, worked part-time, had multiple employers, or received taxable benefits, HMRC may have collected tax at the wrong rate. Self-employed people often overpay if they estimate their income too high at the start of the tax year, then find they earned less. Married couples or civil partners who haven't updated their allowances can also overpay.

Key Takeaways

  • Your refund amount is the difference between what you actually owed and what you already paid — there is no fixed sum for London residents.
  • The most common cause of overpayment is an incorrect tax code, which happens when you change jobs, work multiple roles, or have untaxed income.
  • HMRC calculates your refund automatically when you file a Self Assessment tax return, or you can request a review of your PAYE coding if you are employed.
  • Refunds typically arrive within four to six weeks of HMRC processing your claim, though complex cases can take longer.
  • You can check how much HMRC thinks you owe or are owed by logging into your personal tax account online.

How HMRC calculates the amount you are owed

HMRC works backwards from your total income for the tax year (6 April to 5 April). They explore your personal allowance — currently £12,570 for the 2024/25 tax year — then calculate tax at the standard rates: 20% on income between £12,571 and £50,270, 40% on income between £50,271 and £125,140, and 45% on anything above that. They then subtract what you have already paid through PAYE deductions or Self Assessment payments.

If you are employed, your employer deducts tax based on your tax code. A code like 1257L means you have a personal allowance of £12,570. If your code is wrong — because HMRC did not know about a second job, a pension, or a change in circumstances — you will have paid the wrong amount. Self-employed people pay tax through Self Assessment, where you report your actual profit and HMRC sends you a bill or issues a refund based on what you owe.

The calculation is mechanical once HMRC has the right information. They do not round up or down in your favour. If you are owed £47, you receive £47. If you owe £23, you pay £23.

Why your refund might be larger or smaller than you expect

A large refund usually means you significantly overpaid — often because you worked for only part of the year, had a tax code that was too low, or had income that was not taxed at source. Someone who left a job in September and did not work again until January might have paid a full year's tax on nine months of income, creating a substantial refund when they file their return.

A small refund or no refund at all does not mean you did not overpay; it means your employer or the tax system got close to the right amount. Many people receive no refund because their PAYE deductions matched their actual liability almost exactly. This is not a failure — it is the system working as intended.

Refunds can also be affected by tax reliefs you have not claimed. If you paid professional fees, made charitable donations, or had work-related expenses, you may be may have access to to relief that reduces your tax bill further. These reliefs do not automatically explore; you have to report them to HMRC through Self Assessment or by updating your records.

How to find out what HMRC thinks you are owed

If you are employed and think you have overpaid, log into your Personal Tax Account on the HMRC website using your Government Gateway credentials. Your account shows your tax code, your estimated tax for the year, and any refund HMRC has calculated. You can also see a breakdown of your income sources and deductions.

If the information is wrong — for example, if HMRC does not know about a second job — you can update it directly in your account. Changes take effect when ready, and HMRC will recalculate your tax and issue a refund if you have overpaid.

If you are self-employed or have complex income, you must file a Self Assessment tax return. You can file online through your Personal Tax Account or using tax software. HMRC calculates your refund once they receive and process your return, usually within four to six weeks.

When the refund arrives and how it reaches you

HMRC processes refunds in the order they receive claims. If you file a Self Assessment return early in the tax year (before the 31 January important date), your refund may arrive within four weeks. If you file closer to the important date or after it, processing takes longer — sometimes eight to twelve weeks during the busy season.

Refunds are paid directly into the bank account you have registered with HMRC. You cannot choose a different account or request a cheque. If you have not registered a bank account, HMRC will contact you to ask for one before they can send the money.

If you have an outstanding tax bill from a previous year, HMRC will offset your refund against that debt before paying you anything. For example, if you are owed £600 but owe £200 from last year, you will receive £400.

Refunds for specific situations in London

If you worked abroad for part of the year, you may be may have access to to split-year treatment, which can increase your refund by allowing you to claim a full personal allowance for the part of the year you were in the UK. This requires a specific claim to HMRC and does not happen automatically.

If you are a student with a part-time job, you may have overpaid because your income fell below the personal allowance threshold. Students do not automatically get refunds; you have to file a Self Assessment return to claim one. Many students do not realise this and leave money unclaimed.

If you received taxable benefits — a company car, private medical insurance, or a housing allowance — these are added to your income for tax purposes. If your total income (including benefits) pushed you into a higher tax bracket, you may be owed a refund once you report the benefits correctly.

What to do if you disagree with the refund amount

If HMRC has calculated a refund but you believe the amount is wrong, check your Personal Tax Account first to see the breakdown. Look for missing income sources, incorrect deductions, or a tax code that does not match your circumstances.

If you spot an error, update your account when ready. If the error is in HMRC's records rather than yours — for example, if your employer reported the wrong amount of income — contact HMRC directly through your Personal Tax Account or by phone. You will need to provide evidence: payslips, P45 forms, or bank statements showing what you actually earned.

If you have filed a Self Assessment return and disagree with HMRC's calculation, you can ask for a review within four years of the original important date. HMRC will look at your return again and either confirm the amount or issue a revised calculation.

Frequently Asked Questions

Is there a maximum refund amount in London?

No. Your refund is based on how much you overpaid; there is no cap. Someone earning £100,000 who overpaid significantly could receive a refund of several thousand pounds. The amount depends entirely on your income and what you paid, not on where you live.

Can I get my refund as a lump sum or do I have to wait?

You cannot speed up the process or request a different payment method. HMRC processes refunds in order and pays them directly to your registered bank account. Standard processing takes four to six weeks after they receive your claim, but this varies during busy periods.

What if I think HMRC owes me money but I have not filed a return?

If you are employed and think you have overpaid, you do not have to file a return — you can ask HMRC to review your tax code through your Personal Tax Account. If you are self-employed or have other income, you must file a Self Assessment return to claim a refund. HMRC will not calculate one without a return.

Do I pay tax on the refund itself?

No. A refund is money you overpaid; it is not new income. You do not pay tax on it, and you do not have to report it as income on future returns.

What happens if I move away from London before my refund arrives?

Your refund will still arrive in your registered bank account. You do not need to notify HMRC that you have moved within the UK. If you move abroad, update your address in your Personal Tax Account so HMRC can contact you if needed, but your refund will still be paid to your UK bank account.