More than 730,000 UK households failed to claim PAYE refunds on their earnings last year, leaving £624 million unclaimed, according to The Investors Centre. The average unclaimed refund per household is £855, as calculated by the Institute of Chartered Accountants in England and Wales (ICAEW).
Why refunds go unclaimed
Thomas Drury, money-saving expert at The Investors Centre, explained that many people assume PAYE handles everything automatically. “But PAYE is only as accurate as the information behind it,” he said. “If your tax code was wrong, your job changed, your pension income changed, or HMRC did not have the full picture at the right time, you may have paid more tax than you needed to.”
Drury emphasised that taxpayers must take action to claim refunds. “The worrying part is that many people do not realise they have to take action. A refund can be due, but if you ignore the letter or do not check your account, that money can sit unclaimed.”
How to check if you are owed money
HMRC issues P800 tax calculation letters to notify individuals if they have overpaid or underpaid tax. Drury warned: “A P800 is not something to throw in a drawer. It is a calculation of whether you paid the right amount of tax. If it says you are due a refund, you need to read exactly what it tells you to do. Some people assume HMRC will just send the money automatically, but that is not always the case. If the letter says you need to claim, you need to claim.”
Taxpayers have four years from the end of the affected tax year to claim their refund. Adelle Greenwood, tax manager at ICAEW, said: “With more than 700,000 people missing out on a total of £624m in tax refunds last year, we'd encourage all taxpayers to check whether they are owed money from HMRC.”
Guidance for claiming
Anyone who believes they have been overcharged but have not received a P800 from HMRC can find guidance on the tax authority’s website on how to submit a claim. The process typically involves checking your tax code and income details, and contacting HMRC if corrections are needed.
