HMRC has confirmed five key reasons people are being sent tax refunds, as the government's tax arm paid back more than £50 million to around 12,500 pension savers over just three months. Between April and June, HMRC refunded approximately 12,500 individuals who were overtaxed when accessing their retirement savings, with each person receiving an average of £4,000.
Why You Might Be Owed a Tax Refund
Beyond pension overpayments, there are several other common scenarios that can lead to a tax refund. Money Saving Expert, the site founded by BBC and ITV star Martin Lewis, highlighted that millions of people are overtaxed every year, with some due £1,000s back. The site urges savers to use its Tax Code Calculator to check if their tax code is correct.
In the tax year 2024/25 (which ended on 5 April 2025), HM Revenue & Customs (HMRC) paid around £3 billion to 4.2 million people who overpaid income tax, according to a Freedom of Information request. These figures relate to those who pay tax via the pay-as-you-earn system (PAYE), so they do not include self-employed individuals who complete a self-assessment tax return.
Wrong Tax Code and Job Changes
One of the primary reasons for overpayment is being on the wrong tax code. If your tax code is incorrect, you may be paying too much tax. Additionally, if you changed jobs, HMRC can incorrectly assume you have two jobs if your former employer hasn't notified them of your departure. Those starting a first job mid-tax year can easily be placed on an emergency tax code, so it's wise not to assume the amount in your first few pay packets is correct.
Work Expenses and Uniform Costs
You may be owed tax relief if you paid for work-related expenses that your employer didn't reimburse. If the overpayment occurs in the current tax year and you're on PAYE, HMRC will typically correct your tax code and inform your employer, with the refund paid automatically through your wages. If the tax year has ended, HMRC will calculate what you're owed and send a P800 tax calculation or, in some cases, a 'simple assessment' letter.
Similarly, if you paid to maintain and clean your work uniform yourself, you could be eligible for tax relief. If part of your salary is made up of company benefits such as a company car, healthcare cash plan, or medical insurance, it's possible you're being taxed incorrectly. And if you earn from more than one source, such as a second job, you might find you've been taxed incorrectly on a chunk of your earnings.
Marriage Allowance
If you are married or in a civil partnership, you may be able to reduce your tax bill by claiming Marriage Allowance. This special tax rule allows you to transfer £1,260 of your personal allowance (currently £12,570) to your husband, wife, or civil partner, potentially lowering the amount of tax you pay.
