HMRC has warned that millions of taxpayers are missing out on money they are owed, as the government's tax arm no longer automatically issues PAYE refunds. Tax refunds are due to those who pay too much income tax within a single tax year, which can happen for various reasons, such as changing jobs or having an incorrect tax code.
The most recent HMRC figures reveal that over 730,000 PAYE refunds went unclaimed last year, with the average refund worth around £855. This means Brits collectively left a staggering £624 million with the taxman.
How to Claim Your Tax Refund
Posting on X, the official HMRC account encouraged people to log into the HMRC app to reclaim any tax they are owed. There are several ways to check eligibility and secure a refund. Taxpayers can use the checker tool on Gov.uk to find out whether they may be entitled to a tax refund.
In most cases, those who have overpaid tax will also receive a P800 tax calculation letter following the end of the tax year in which the overpayment occurred. The letter will contain a full breakdown of HMRC's calculations, detailing how much tax you should have paid versus how much you actually paid. Should you believe there is an error in these figures, you will need to get in touch with HMRC directly.
Claiming Your Refund
These letters also contain instructions on how to claim your money and will indicate whether you can do so online via the official Government website. Alternatively, you can claim a refund through your personal tax account, the HMRC app, or by getting in touch with HMRC directly. Taxpayers must claim their refund within four years. Once claimed, the refund should arrive within five working days if submitted online, or within six weeks if you opted for a cheque to be posted to you.
Your P800 letter may instead state that HMRC will send you a cheque, in which case you should expect to receive it within 14 days of the date shown on your letter.
Common Reasons for Overpayment
One of the most frequent reasons for paying the wrong amount of tax is having an incorrect tax code. This can occur if you switch jobs during the tax year and may result in you not being allocated the correct personal allowance. HMRC urges all taxpayers to check their tax code and ensure they are not missing out on money they are entitled to.
