HMRC has issued an alert urging taxpayers to check if they have overpaid tax and claim their refunds. The tax authority highlighted that millions of people have missed out on claiming their dues and detailed how people can check if they might be one of them.
HMRC no longer issues automatic PAYE refunds
Tax refunds are owed to people who pay too much income tax in one tax year, which can happen for various reasons. HMRC no longer issues PAYE refunds automatically, so taxpayers need to take action to claim back their overpaid tax.
The latest HMRC figures show over 730,000 PAYE refunds went unclaimed last year, with the average refund worth around £855. This means Brits left a total of £624 million with the taxman, according to Sky News.
How to check if you are owed a tax refund
Taking to X, the official HMRC account advised people to log into the HMRC app to claim back any tax they are owed. There are several ways to check eligibility and get a refund.
Taxpayers can use the checker tool on Gov.uk to see if they may be eligible for a tax refund. Normally, people who have overpaid tax also receive a P800 tax calculation letter after the end of the tax year. The letter includes a detailed breakdown of the calculations HMRC used to determine how much tax should have been paid versus what was actually paid. If there is a mistake, taxpayers need to contact HMRC.
Claiming your refund online or by phone
P800 letters contain instructions on how to claim the money and indicate if it can be claimed online via the official Government website. Taxpayers can also claim a refund through their personal tax account, the HMRC app, or by contacting HMRC directly.
Taxpayers have four years to claim their refund. Once claimed, the refund should be sent within five working days if claimed online, or within six weeks if a cheque is requested. If the P800 letter says HMRC will send a cheque, it should arrive within 14 days of the letter's date.
Beware of scams
MoneySavingExpert previously warned taxpayers to be wary of texts, emails, or calls about tax refunds. HMRC always contacts people by post regarding refunds, and scammers may take advantage of those expecting money back.
Common reasons for overpaying tax
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; or UK income earned before leaving the UK.
One of the most common reasons for paying the incorrect amount of tax is having the wrong tax code. This can happen if you change jobs during the tax year and may result in not being allocated the right amount of personal allowance.
