HMRC has issued an alert to millions of employees after more than 730,000 individuals failed to claim tax refunds last year, with the typical unclaimed sum totalling £855. The tax authority is currently examining approximately 45 million PAYE tax accounts to pinpoint workers who have either overpaid or underpaid tax.
P800 tax calculation letters have already begun landing on doormats and are anticipated to keep arriving until November 2026. Individuals who have overpaid tax are being prioritised, which means employees who are due money should typically receive communication from HMRC before those who owe additional tax.
Receiving a P800 does not guarantee a refund
It's crucial to note that receiving a P800 doesn't automatically guarantee that a refund will arrive in your bank account. HMRC has revised its procedure and, where claims span several tax years, employees may need to proactively apply for their repayment.
Approximately 700,000 workers nationwide have been encouraged to take special notice, reports the Express. These workers pay tax via PAYE but can switch between assignments, employers and umbrella companies more regularly. This can lead to alterations in tax codes and HMRC documentation, potentially heightening the likelihood of someone paying an incorrect amount of tax.
Flexible workers urged to check tax position
Seb Maley, CEO of Qdos, an insurance provider 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 added: "Moving between assignments and PAYE employers means there can be more changes to keep track of. HMRC itself recognises that starting and finishing jobs can result in people paying the wrong amount of tax. So if you work flexibly, don't assume your tax position is automatically correct."
Mr Maley also cautioned that being informed you are owed money does not necessarily mean the funds will arrive without any action on your part. He said: "More than 730,000 refunds went unclaimed last year, averaging £855. If you receive a P800, check the figures carefully, follow HMRC's instructions and make sure you claim anything you're owed."
How to claim and avoid scams
Employees ought to scrutinise any P800 they receive thoroughly and cross-reference the figures against their own records. HMRC has additionally urged people to remain vigilant against tax refund scams. The tax authority will not get in touch via text message or email requesting that people claim a refund, so any messages making such approaches should be treated with suspicion.
For those who have underpaid tax, the procedure is generally quite different. Where money is owed to HMRC, it will typically be recovered by adjusting the individual's tax code through PAYE, meaning workers ordinarily do not need to make a separate payment.
