Thousands of individuals have failed to claim tax refunds from HMRC, averaging £800 each, as per recent data. Overpayment of income tax often occurs due to incorrect tax coding. HMRC typically notifies individuals of overpaid tax through a P800 tax calculation letter for refund claim instructions. Failure to respond results in uncashed cheques being sent to the registered address, with tens of thousands remaining unclaimed yearly.
Newly obtained data reveals that HMRC issued 1,746,720 cheques last year, with 178,180 of them never cashed, totaling £144 million in unclaimed refunds. HMRC aims to reduce cheque issuance by transitioning to digital communication methods with taxpayers. Despite this, many individuals still receive tax refunds via cheques.
Taxpayers are encouraged to ensure their tax codes are correct, as they determine tax-free income allowances for each tax year. The most common tax code is 1257L, granting individuals with a standard personal allowance of £12,570 tax-free annually. Taxpayers can verify their tax code on payslips, P45s, P60s, or online at GOV.UK. The MoneySavingExpert.com offers a free tax code calculator for self-assessment.
Individuals who believe they have overpaid tax can contact HMRC at 0300 200 3300 or through the HMRC app to claim refunds for up to four previous years. Even if overpayment extends beyond this period, individuals can still request a refund.
