HMRC has issued a warning urging taxpayers to check if they have overpaid tax and claim any refunds owed. The tax authority highlighted that a 'million' people have failed to claim their dues and explained how to determine eligibility.
Why Tax Refunds Go Unclaimed
Tax refunds are owed 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. HMRC no longer automatically issues PAYE refunds, meaning taxpayers must take action themselves.
According to Sky News, the most recent HMRC figures show over 730,000 PAYE refunds went unclaimed last year, with the average refund worth approximately £855. This means Brits collectively left a staggering £624 million with the taxman.
How to Check and Claim
Posting on X, the official HMRC account encouraged people to log into the HMRC app to reclaim any tax they are owed. Taxpayers can also use the checker tool on Gov.uk to discover if they may be entitled to a tax refund. In most cases, those who have overpaid tax will receive a P800 tax calculation letter after the end of the tax year in which the overpayment occurred.
The P800 letter contains a complete breakdown of HMRC's calculations, detailing how much tax you should have paid versus how much you actually paid. If you believe there is an error, you need to contact HMRC directly. The letter also includes guidance on how to claim your money and indicates whether this can be done online via the official Government website. Alternatively, you can request a refund through your personal tax account, the HMRC app, or by contacting HMRC directly.
Deadline and Payment Times
Taxpayers must claim their refund within four years. Once submitted, the refund should reach you within five working days if claimed online, or within six weeks if you choose to have a cheque posted. If your P800 letter confirms HMRC will issue a cheque, you should expect to receive it within 14 days of the date shown on your letter.
Beware of Scams
MoneySavingExpert has previously cautioned taxpayers to stay alert to texts, emails, or calls relating to tax refunds, as HMRC will always get in touch by post regarding refunds. Fraudsters may try to take advantage of those expecting money back.
Common Reasons for Overpayment
Tax refunds can be issued if you paid too much tax on: pay from a job; job expenses such as working from home, fuel, work clothing, or tools; a pension; a Self Assessment tax return; a redundancy payment; UK income if you live abroad; interest from savings or payment protection insurance (PPI); income from a life or pension annuity; foreign income; UK income earned before leaving the UK. One of the most common reasons for paying the incorrect amount of tax is having an inaccurate tax code, which can happen if you change jobs during the tax year and may lead to not receiving the proper personal allowance.
