HMRC has announced that nearly one million people are missing out on an average tax refund of £473 because they have not responded to letters. Tax refunds occur when individuals overpay income tax, often due to incorrect tax codes, job changes, or multiple employments. After the tax year ends in April, HMRC calculates overpayments and sends a P800 letter. Claims can be made online via a Personal Tax Account or the HMRC app, with payments typically processed within five working days, while cheques can take up to six weeks.
How to Claim Your Refund
While HMRC often automatically issues refunds via P800 letters, you usually need to claim if you have job expenses (such as working from home or tools) or complex income. Claims must be made within four years using the HMRC app or gov.uk claim form. Officials stated: "Remember getting a letter about a tax refund but didn't do anything about it? Last year, almost 1 million people didn't claim back the money they're owed. On average people get £473 back when claiming a tax refund. Download the HMRC app to check."
Changes to the Refund Process
Millions overpay tax each year for various reasons, entitling them to a rebate. HMRC sends letters annually instructing recipients on how to claim. Until 2024, recipients had 21 days to respond, after which a cheque was issued to the address on file. However, hundreds of thousands of cheques remain uncashed. HMRC has been reducing cheque issuance, dropping from 4.1 million in the 2023-2024 tax year. Since 2024, HMRC has adopted a new system that contacts customers through other methods unless they specifically request a cheque.
Robert Salter, a partner at tax and accountancy firm Blick Rothenberg, commented: "It is certainly a bit problematic that HMRC continues to use cheques to settle tax refunds in so many cases. Until people do consistently open their HMRC correspondence, there is always going to be a problem and delays with the tax refund process."
What to Do If You Have an Uncashed Cheque
Most people receive a P800 letter around June, following the end of the tax year in April. This letter instructs recipients to request payment via BACS bank transfer by logging into their government gateway account, which can be opened at any time. Uncashed cheques from HMRC cannot be cashed after six months, but they do not become void. A replacement can be requested, and there is technically no time limit to cash it, though verification may become difficult after nine years.
An HMRC spokesperson said: "The vast majority of PAYE repayments are issued via bank transfer, which is now the default option, and the quickest and most secure way for customers to receive their money. Customers can still request to receive their repayment via cheque and it's their responsibility to cash it if they choose this method."
