More than 730,000 people missed out on tax refunds worth an average of £855 last year, according to HMRC, which is urging workers to check their P800 letters. The tax office is reviewing around 45 million PAYE tax accounts to identify workers who have paid too much or too little tax.
P800 letters being sent until November
P800 tax calculation letters have already started being sent out and are expected to continue arriving until November 2026. People who have overpaid tax are being dealt with first, meaning workers who are owed money should generally hear from HMRC before those who have underpaid.
However, receiving a P800 does not necessarily mean a refund will automatically appear in a bank account. HMRC has updated its process and, where claims cover multiple tax years, workers may need to actively request their repayment.
Umbrella workers urged to pay attention
Around 700,000 umbrella workers across the UK have been urged to pay particular attention. These workers are taxed through PAYE but can move between assignments, employers and umbrella companies more frequently. This can result in changes to tax codes and HMRC records, potentially increasing the risk of someone paying the wrong amount of tax.
Seb Maley, CEO of Qdos, an insurance provider for flexible workers, said: "HMRC is reviewing the taxes 45 million people and the UK's estimated 700,000 umbrella workers should pay particularly close attention."
He added: "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."
Check figures and be alert to scams
Mr Maley also warned that being told you are owed money does not necessarily mean the cash will arrive without any action. "More than 730,000 refunds went unclaimed last year, averaging £855," he said. "If you receive a P800, check the figures carefully, follow HMRC's instructions and make sure you claim anything you're owed."
Workers should check any P800 they receive carefully and compare the figures with their own records. HMRC has also warned people to be alert to tax refund scams. The tax office will not contact people by text message or email asking them to claim a refund, so messages making such requests should be treated with caution.
For people who have underpaid tax, the process is generally different. Where money is owed to HMRC, it will typically be recovered by adjusting the person's tax code through PAYE, meaning workers usually do not need to make a separate payment.
