HMRC has confirmed that, from August 19, most taxpayers will no longer automatically receive their P800 tax refund by cheque after certain multi-year calculations are completed. Instead, they must actively request the money, putting thousands at risk of losing the cash they are owed.
HMRC data shows that more than 730,000 tax refunds were left unclaimed last year, with the average repayment worth £855. The change applies after multi-year P800 tax calculations have been completed, meaning taxpayers will need to take action to secure their refunds.
What is a P800 tax calculation?
A P800 tax calculation is a letter from HMRC that explains whether you have paid too much or too little Income Tax through PAYE during a tax year. If you have overpaid, it explains how to claim your refund. If you have underpaid, it explains how HMRC plans to collect the money. Receiving a P800 does not automatically mean your tax affairs are complete.
The calculation is based on information HMRC already holds, which means it will not necessarily include every employment expense or tax relief you may be entitled to claim. Seb Maley, CEO of Qdos, an insurance provider for flexible workers, urged people not to be complacent.
"HMRC is reviewing the taxes 45 million people and the UK's estimated 700,000 umbrella workers should pay particularly close attention," he said. "Moving between assignments and PAYE employers means there can be more changes to keep track of. HMRC itself recognises that starting and finishing jobs can result in people paying the wrong amount of tax. So if you work flexibly, don't assume your tax position is automatically correct."
Why refunds go unclaimed
Maley added: "And crucially, being told you're owed money by HMRC doesn't always mean it will simply land in your account. Depending on the circumstances, you may still need to actively claim it. More than 730,000 refunds went unclaimed last year, averaging £855."
He advised: "If you receive a P800, check the figures carefully, follow HMRC's instructions and make sure you claim anything you're owed."
How to claim your repayment
Anyone who is instructed to request their repayment can do so through HMRC's online tax overpayments service. They will need the unique reference number shown on their P800 along with their National Insurance number.
For those who claim online, HMRC says the repayment should usually arrive within five working days. Choosing to receive the money by cheque can take considerably longer, with payments potentially taking up to six weeks.
