overpayment of tax

Hi hoping some people can help with this, Last year I was expecting a large bonus which didn't materialize this year but will likely in coming year; however I paid a large sum in PAYE overpayment the previous year in expectation of this non-PAYE income. The result was that I got interest on this overpayment and after some research it seem that interest paid by HMRC is no considered income for income tax purposes - hence the interest paid by HMRC on this overpayment is exempt from tax. I wish to confirm this to be the case if anyone can help. My three questions are 1. Can anyone confirm that I do not have to pay income tax on interest paid by HMRC on overpayment of PAYE tax. 2. Is there a limit to the amount of money you can overpay tax by and thereby get interest on that sum. 3. Is there a time limit of how long you can leave overpayment of tax money with HMRC before you risk not getting it back when required. Basically I want to leave with HMRC and prepay my potential future tax liability.

Hi E Walsh,

The repayment supplement you receive from HMRC is not a taxable income.
HMRC only review the last 4 tax years, if you think you may be due a repayment for a year you should always enquire within 4 years of the
tax year ending to ensure a repayment has been issued if due.

Thank you.

Hi I have a full time job and a side hustle that earned me £1200.23 this tax year, how much tax would I have to pay on that amount, considering my main job deducts tax and insurance? I feel I have over payed tax for the side hustle because the calculations haven't taken into account the deductions from my main job. Any ideas? Louise

Hi Louise D,
If your main full time job is using all your personal allowance £12570 then your full additional income will be taxable.
This will be taxed depending on the tax band you are on.
If you are a basic rate tax payer in England this will be 20%.
You can check the rates  here:
Income Tax rates and allowances for current and previous tax years Updated 15 January 2024
Thank you.