Your refund amount depends on how much tax you overpaid, not on where you live

A tax refund in London is calculated the same way as anywhere else in the UK — it is the difference between the tax you actually paid and the tax you actually owed. If you paid £5,000 in tax but only owed £4,200, your refund is £800. Your postcode does not change that calculation. London has no separate tax system, no local income tax, and no regional adjustment to refunds.

What does change is how long the refund takes to reach you. HMRC processes refunds from its offices across the UK, but delivery speed can vary slightly depending on your bank and whether you claim by post or online. The amount itself, though, is purely mathematical: tax paid minus tax owed.

Key Takeaways

  • Your refund amount is the difference between tax you paid and tax you actually owed, regardless of where you live in the UK.
  • London residents use the same tax bands and allowances as the rest of England, so location does not affect the size of your refund.
  • You can estimate your refund by checking your P60 (total tax paid) against your tax return calculation, or by using HMRC's online tools.
  • Refunds typically arrive within 4 to 8 weeks of HMRC receiving your claim, though some take longer if additional information is needed.

How HMRC calculates what you overpaid

HMRC starts with your total income for the tax year (6 April to 5 April). This includes salary from your employer, self-employment income, rental income, pension withdrawals, and any other taxable source. They then subtract your personal allowance — currently £12,570 for the 2024/25 tax year for most people — and apply the standard tax rates to what remains.

Next, they compare this calculated tax against what you actually paid. If you are employed, your employer deducts tax through PAYE (Pay As You Earn) throughout the year. If you are self-employed, you pay tax through Self Assessment. If you have multiple income sources, you may have paid tax in several ways. HMRC adds all of this up and works out the difference.

Common reasons for overpayment include: you left a job partway through the year and your employer did not adjust your tax code, you had two jobs at once and both applied a full personal allowance, you are over 65 and may have access to to a higher allowance but your employer did not know, or you paid tax on income that should have been covered by your allowance.

What your P60 tells you about your refund

Your P60 is the document your employer gives you by 31 May each year showing your total salary and total tax paid. If you earned £25,000 and your P60 shows £2,430 in tax paid, you can do a quick check: subtract the personal allowance (£12,570) from your salary, leaving £12,430. Tax on that at 20% is £2,486. If you only paid £2,430, you overpaid by roughly £56 — though the exact figure depends on when you started or stopped work and whether you had other income.

If you have multiple P60s (from different employers) or income from self-employment, rental property, or savings interest, the calculation becomes more complex. You will need to add all income sources together, apply your allowances, and calculate tax on the total. This is where a tax return becomes necessary, and where most people find it easier to let HMRC do the maths.

Using HMRC's online tools to estimate your refund

You can log into your HMRC online account (through Government Gateway) to see a summary of your tax position. This shows your income as HMRC records it, your tax code, and any tax you have paid. It does not always show a refund estimate directly, but you can use the figures to calculate one yourself.

If you think you are owed money, you can submit a claim through your online account or by post using form P87. HMRC will then review your records and either issue a refund or tell you that you do not have an overpayment. The online route is faster — HMRC aims to process online claims within 4 weeks, though some take 8 weeks or longer if they need to ask you for more information.

Refunds for part-year work and job changes

If you started a new job partway through the tax year, your previous employer may have deducted tax as if you were working the full year. When you left, they should have adjusted your final payslip, but this does not always happen correctly. The same issue occurs if you had two jobs simultaneously — both employers apply a full personal allowance, meaning you pay tax twice on income that should have been covered once.

In these cases, your refund can be substantial. If you earned £8,000 in the first job and £7,000 in the second, both under the personal allowance threshold, you should have paid no tax at all. But if both employers deducted tax, you could be owed several hundred pounds. HMRC will recalculate based on your actual total income and issue the refund.

Refunds for over-65s and higher personal allowances

If you were born before 6 April 1938, you are may have access to to a higher personal allowance — currently £14,370 for the 2024/25 tax year. If your employer did not know your date of birth or did not update your tax code, they may have deducted tax at the standard rate. You can claim back the difference.

Similarly, if you are may have access to to Marriage Allowance (a scheme that lets one partner transfer unused allowance to the other), you may have overpaid tax in previous years before you claimed it. You can go back up to four tax years and claim refunds for each year you were may have access to but did not claim.

How long refunds take and how they arrive

Once HMRC approves your refund, the money is usually sent to your bank account within 5 to 10 working days. If you claimed online, this is faster. If you claimed by post, HMRC first has to open and process your letter, which adds 2 to 3 weeks to the timeline. In total, expect 4 to 8 weeks from the date HMRC receives your claim to the date the money lands in your account.

Some refunds take longer. If HMRC needs to verify information — for example, if you reported self-employment income and they want to cross-check it against your accounts — they will contact you and the clock resets. If you do not respond, they cannot issue the refund. If you have a debt to HMRC from a previous year, they may offset your refund against that debt instead of sending it to you.

What to do if your refund seems too small or too large

If HMRC issues a refund that does not match your calculation, check their working. Log into your online account and look at the "Income Tax" section. This shows HMRC's record of your income, your allowances, and the tax they calculated. If the figures are wrong — for example, if they have recorded income you did not receive, or missed income you did report — you can contact HMRC to correct it.

If the figures are correct but the refund still seems wrong, double-check your own maths. Remember that tax bands change year to year, and that some income (like certain savings interest or dividends) is taxed differently. If you are still unsure, you can ask HMRC for a detailed explanation of how they calculated your refund. They will provide a breakdown showing your income, allowances, and tax at each rate.

Frequently Asked Questions

Does living in London change how much tax I owe or how much I can get back?

No. London is part of England and uses the same tax system, allowances, and rates as the rest of the country. Your postcode does not affect your personal allowance, your tax bands, or your refund calculation. The only difference is that some London boroughs have different council tax bands, but that is separate from income tax.

Can I claim a refund for tax years before this one?

Yes, you can claim back up to four tax years. If you overpaid in 2020/21, 2021/22, 2022/23, or 2023/24, you can still claim. HMRC will not automatically send these refunds — you have to ask. The earlier the year, the more important it is to claim soon, because the four-year window closes.

What if I am self-employed — how do I know if I have overpaid?

Self-employed people pay tax through Self Assessment. You submit a tax return showing your income and expenses, and HMRC calculates the tax you owe. If you have paid more through payments on account or other means, you will see a refund due on your Self Assessment statement. You can view this through your online account or wait for HMRC to send you a statement.

Will HMRC contact me if I am owed money?

Not always. HMRC will contact you if they spot an obvious overpayment (like a tax code error), but if you have simply paid too much through PAYE, you usually have to claim. The exception is if you are due a refund and HMRC has your bank details on file — they may send it automatically, but do not rely on this.

What happens if HMRC owes me money but I also owe them money from another year?

HMRC will offset the refund against the debt. If you are owed £500 but owe £300 from a previous year, HMRC will keep £300 and send you £200. You can ask them to reconsider if the debt is under dispute, but offsetting is the default.