HMRC tax refund: 730,000 went unclaimed, averaging £855

If you have overpaid tax, an HMRC tax refund may be waiting for you, but you may have to ask for it. HMRC data shows that more than 730,000 tax refunds were left unclaimed in the previous financial year, with an average value of £855, according to the Manchester Evening News. The figure counts refunds and individuals rather than households, and £855 is an average, not a sum anyone is guaranteed.

HMRC is checking about 45 million PAYE records this year to find workers who have paid too much or too little tax. My London reports that P800 tax calculation letters have already started to arrive and are expected to keep coming until November 2026.

How to claim an HMRC tax refund: the change in plain English

Tax refunds, also called rebates, are paid to people who have paid too much tax in a financial year, which runs from 6 April to 5 April. The Manchester Evening News says this can happen if you started or left a job, had more than one employer at once, or were made redundant part-way through the year. A wrong tax code, used by your employer or by HMRC, can have the same effect.

What has changed is how the money reaches you. The Manchester Evening News reports that HMRC confirmed in August that, once certain multi-year P800 calculations are complete, most taxpayers will no longer automatically be sent a cheque. Instead they will have to request the repayment themselves.

My London adds that a P800 does not guarantee money will land in your bank account. Where a claim covers several tax years, employees may need to apply for the repayment. The change does not apply identically to everyone, because some calculations will still say HMRC intends to send a cheque automatically. Read the wording on your own letter before doing anything.

Who pays more or less, and who should look twice

People who have overpaid are being prioritised, according to My London, so anyone owed money should typically hear from HMRC before those who owe extra. For people who have underpaid, the process is usually different. Where money is owed to HMRC it will typically be recovered by changing the tax code through PAYE, so workers do not ordinarily need to make a separate payment.

Some workers are more likely to be affected. Seb Maley, chief executive of Qdos, an insurer 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 said moving between assignments and PAYE employers means more changes to keep track of, and that flexible workers should not assume their tax position is correct.

There is one catch for anyone who also has a bill coming. HMRC says you may not get a refund if you have tax due within the next 45 days, for example a payment on account. In that case the money is deducted from what you owe.

A worked example: how long an overpaid tax refund takes

The timing depends on how you choose to be paid. The Manchester Evening News says HMRC expects online claims to arrive usually within five working days, while a cheque can take considerably longer, potentially up to six weeks. The table below applies those windows to an illustrative case, which is our own example rather than a case from HMRC.

On that timetable, a taxpayer owed the average £855 could wait around five weeks longer for the same money by cheque. Scale matters too. Multiplying 730,000 refunds by £855 gives roughly £624 million left unclaimed, our own calculation, which assumes the average applies across every refund.

What to do now

Start by checking whether you are owed anything. The Manchester Evening News says you can use the tool on the Gov.uk website to see if you have paid too much tax. HMRC lists the possible causes, including pay from a job, job expenses such as working from home, fuel, work clothing or tools, a Self Assessment return, a redundancy payment and some pension withdrawals.

If a P800 arrives, check the figures against your own records and read what it says about payment. If it tells you to make a claim, use HMRC’s online tax overpayments service. You will need the unique reference number on the P800 and your National Insurance number. Once you have claimed, the status in your online tax account may show as “pending”. HMRC says this means the refund has been created but still needs to be approved and paid.

Be wary of anything that arrives unprompted. My London reports that HMRC will not contact people by text message or email asking them to claim a refund, so any such message should be treated with suspicion.

Your questions answered

Does HMRC automatically refund overpaid tax?

Not always, and not in the way it used to. The Manchester Evening News reports that after certain multi-year P800 calculations, most taxpayers will no longer automatically receive a cheque and must request the money. Some P800s will still say HMRC plans to issue a cheque, so the wording on your letter decides which applies to you.

How do I get a refund if I overpaid my taxes?

If your P800 tells you to claim, use HMRC’s online tax overpayments service with the reference number on the letter and your National Insurance number. If you have not had a letter, the Gov.uk tool can show whether you have overpaid. HMRC says a refund can be reduced if you owe tax in the next 45 days.

What is the longest time to wait for a tax refund?

The sources give two timings. Online claims should usually pay within five working days, and a cheque can take up to six weeks, according to the Manchester Evening News. If your refund shows as “pending” in your online tax account, HMRC says it has been created but still needs approval and payment.