It’s common to be owed a tax rebate if you have had a gap in employment but it’s important to remember that you will normally need to pay tax on any Job Seekers Allowance payments depending on the amount of other income you have.
What you need to know about JSA and a tax refund
Job Seekers Allowance is a ‘taxable benefit’ and this definition has two potential effects on your tax position;
- Working out your tax bill for the tax year.
- Making any kind of tax refund claim.
Making a tax refund claim
HMRC must have evidence of all taxable income before it can process any type of tax refund claim. This includes Job Seekers Allowance if you have received any payments during the tax year you are claiming for, because it is a taxable benefit.
Despite being a related government department, HMRC does not usually have Job Seekers Allowance information as part of their records. This means that you must provide your P45 or a statement from Jobcentreplus declaring your allowance income amount when you submit your tax refund claim.
Perhaps you registered for Job Seekers Allowance, but got a job so quickly that you never actually received any payments. You will need written evidence from Jobcentreplus to prove this to HMRC if you are making any kind of tax refund claim.
Time limits to reclaim a tax rebate
You have four years from the end of the tax year to reclaim any tax you are owed so don’t put it off or you will miss out on what you are due.
Working out your tax bill
Determining Job Seekers Allowance as a taxable benefit means that it can become part of your ‘taxable income’. If you earn over a certain threshold during a tax year, then you will have to pay tax on the total amount of Job Seekers Allowance that you have been paid.
Job Seekers Allowance + Other taxable income = Total taxable income
