Thousands of individuals have failed to claim tax refunds from HMRC averaging £800, as indicated by recent data.
Various factors can lead to overpayment of income tax, with the most common being an incorrect tax code assignment.
HMRC typically notifies individuals of overpaid tax through a P800 tax calculation letter, detailing the process for refund claims.
In cases of non-response, HMRC sends refund cheques to the registered address, yet statistics reveal many of these cheques remain uncashed annually.
New statistics obtained through a Freedom of Information request by The i Paper show that out of 1,746,720 cheques issued by HMRC last year, 178,180 were never cashed, totaling £144 million in unclaimed refunds.
HMRC has been striving to minimize cheque issuance by transitioning to digital communication channels with taxpayers.
Robert Salter, a partner at Blick Rothenberg, expressed concerns over HMRC’s continued use of cheques for tax refunds in numerous instances.
A spokesperson from HMRC highlighted that most PAYE repayments are now processed via bank transfers, the preferred method for speed and security, while customers can still opt for cheque refunds at their own discretion.
Tax codes, comprising numbers and letters, specify an individual’s tax-free income entitlement for a tax year to employers or pension providers.
The widely-used tax code 1257L grants individuals with a single income source a tax-free allowance of £12,570 annually, aligning with the standard personal allowance.
To verify your tax code, check your payslip, P45 (if recently employed), or P60 (end of tax year). Alternatively, access your tax code online on GOV.UK.
Use a free calculator from MoneySavingExpert.com to assess the accuracy of your tax code.
If you suspect overpaid tax, contact HMRC at 0300 200 3300 or through the HMRC app to file a refund claim, which can extend up to four previous tax years, or longer under certain circumstances.
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