HM Revenue & Customs (HMRC) has updated its process for issuing tax refunds to employees and pensioners under PAYE. If you are due a refund, you may no longer receive it automatically and may need to claim it.

Previously, when HMRC issued a P800 tax calculation showing a refund was due, they would automatically send a cheque in the post if you did not claim the refund online within 21 days.

This process has now changed. HMRC has stopped issuing automatic cheques for most P800 refunds. If you receive a calculation showing you are owed money, you must now take action to claim it. If no claim is made, the money will remain with HMRC.

The Quickest Way to Claim

HMRC advises that the fastest way to check if a refund is due and to claim it is via the HMRC App:

1. Open the HMRC App and tap the ‘Pay As You Earn (PAYE)’ section.
2. If a refund is due, you’ll see a tax calculation and a green ‘Claim’ button.
3. Tap the button to submit your claim.
   • Bank Transfer: Funds are typically paid directly into your bank account within 5-10 working days.
   • Cheque: If you prefer a cheque, it can take up to 6 weeks to arrive.

If You Don’t Use Online Services

If you do not have access to the HMRC app or online account, you can still claim your refund using the instructions on your P800 letter.

You can claim via the government website here (you will need your P800 reference number and National Insurance number), or by calling HMRC directly.

Check Your Calculation Carefully

Before claiming any refund, it’s important to review your tax calculation to ensure the figures are correct. Common areas where errors occur include:

• Savings Interest: HMRC receives data directly from banks, but this can sometimes be incorrect or duplicated. Check that the interest figure matches your records and excludes any interest earned in ISAs (which is tax-free). If you hold joint accounts, check that only your share (usually 50%) is included.

• Pension Contributions: If you are a higher or additional rate taxpayer, check that your personal pension contributions are accurately reflected. Relief is not always applied automatically to contributions made outside of salary sacrifice schemes.

• Gift Aid: Ensure any charitable donations made under Gift Aid are included, as you may be entitled to additional tax relief.  

If you receive a tax calculation from HMRC and would like us to review it, please don’t hesitate to get in touch with one of the team.