More than 730,000 UK households are being urged to claim an average of £855 each in unclaimed PAYE tax refunds, according to financial experts at The Investors Centre. The total unclaimed amount is estimated at £624 million, based on HMRC data cited by the Institute of Chartered Accountants in England and Wales (ICAEW).
Why Refunds Go Unclaimed
PAYE (Pay As You Earn) automatically deducts income tax from wages and pensions, but errors can occur. Common reasons for overpayment include changing jobs, being placed on an emergency tax code, retiring, starting pension withdrawals, working only part of a tax year, or having multiple income sources. Thomas Drury, money-saving expert at The Investors Centre, warns that many people assume PAYE is always accurate and that refunds arrive automatically. “But PAYE is only as accurate as the information behind it. 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,” he said.
How to Check and Claim
The warning is timely as the 2025/26 tax year has ended and the 2026/27 year has begun. Workers and pensioners are advised to check their payslips, tax codes, and any HMRC letters. HMRC may send a P800 tax calculation letter if someone has overpaid or underpaid tax. According to GOV.UK, the letter explains how to claim a refund if due. Claims can be made online via the bank transfer service, a personal tax account, the HMRC app, or by contacting HMRC directly. Drury stresses that a P800 should not be ignored: “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.”
Time Limit to Claim
Taxpayers have only four years from the end of the tax year in which the overpayment occurred to claim a refund. “That deadline matters. This is not money you should leave until later. If you are owed a refund, it is your money, and there is no reason to let it sit there unclaimed,” Drury added.
