Tax return that went in my favour... but I have a question.

[Steamer]

I'm guessing this is the best place for this question.

As per usual I filed my tax return online this year, its about the 4th time now. (I'm only a freelance designer so we arnt talking big figures here!)

However... for the first time it went in my favour, only £150 odd (had quite a bit of expense and paid quite a bit of tax the year before so I was happy)

Tonight I've just opened the mail to a letter saying that £3500 odd was being transfered to my account from HMR&C.

I'm a little surprised to say the least... I've just double checked the saved pdf version of the return I filed and it distinctly says 'total tax overpaid: £150 odd'

so wheres the extra money come from?... I really don't want to ask 'them' for fear of getting in trouble!! (but I am an honest fool, so if its not mine they had better have it back)

[Eric Mc]

Did you make tax Payments on Account in January 2008 and July 2008?
If you did, did you take these into account when calculating your tax position for 2007/08?

[Steamer]

Hi Eric

Many thanks for the reply.

Yes I did, Jan 2008 & July 2008 - so its those payments that make up the additional amounts that they are returning to me now?

That does actually seem to work out.

ETA: The bit that foxed me was the fact that when I submitted the form it calculated the overpayment as only being £150 (which I thought would be my rebate for the year... at no point did it mention the larger figure that arrived in the post yesterday).

But what you suggested does make sense - as payments on account are effectively 'forward payments for that coming year'.

Sorry - I guess it was a silly question then really!

Edited by Steamer on Saturday 24th January 11:35

[Eric Mc]

There is often no obvious direct link between the calculation of the tax overpaid for any given tax year and the actual amount refunded. The difference is usually the refund of the overpaid Payments on Account plus a bit of Repayment Supplement (i.e. interest).