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I worked as a full-time employee in the United Kingdom between January 2019 and June 2019. I noticed that the income tax and national insurance fees I paid for January-March were much, much lower than the ones I paid for April-June.

My employer told me that this is because the PAYE system calculates the withheld tax on a per annum basis. That is, they paid my monthly taxes expecting to be employed at their company for the rest of the tax year.

Should I file a tax refund? I am now a sole trader and will file a Self Assessment report, so I am not sure how I should handle this deduction claim.

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Your self-employment income will also contribute to your total taxable income for the tax year 2019-2020, so the PAYE withholding will probably produce roughly the right result anyway.

Given you will have to file a Self Assessment return anyway, you will need to include your employment income from April-June 2019 (you should have a P45 from your employer to do this with) so your final tax bill will be calculated correctly.

You shouldn't expect any substantial refund attributable to that period.

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  • Then I suppose there are two cases: (1) my tax bill is below PAYE, in which case I will file a tax refund OR (2) my tax below is over PAYE, in which case I will have to make a further payment. Feb 9, 2020 at 19:13
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    @PaulRazvanBerg correct, but if you file a Self Assessment return it'll sort itself out either way. Given you won't be paying tax on your self-employed income until that point, I'd guess you will have more tax to pay. It's unlikely 3 months of PAYE withholding will cover a full year's tax bill. Feb 9, 2020 at 19:26

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