Tax Repayment: Could You Be Owed Money by HMRC?
HMRC is reviewing around 45 million PAYE accounts to check whether taxpayers paid the correct amount of tax for the last tax year. P800 letters are already being issued, with HMRC confirming that the reconciliation process will continue through to November 2026 and that overpayments have been prioritised.
For taxpayers who have overpaid PAYE, the review could result in a refund. According to a recent report by FT Adviser, around £620 million is due in HMRC refunds, with taxpayers warned they may need to take action to receive the money owed to them.
If a P800 arrives, it is worth checking it carefully rather than assuming HMRC will handle everything automatically. You should make sure the information used in the calculation is correct and establish what, if anything, you need to do to receive your tax repayment.
Could you have overpaid tax without knowing?
PAYE is designed to collect Income Tax automatically from wages and pensions, which can lead to the understandable assumption that the amount deducted must be correct. However, the amount collected during the year will not always match a taxpayer’s final liability.
Tax deductions are based on the information available to HMRC and your employer or pension provider at the time. If your circumstances change, or the information being used is incomplete or out of date, you could end up paying more tax than was actually due.
HMRC lists several circumstances that can lead to a P800 calculation. These include:
- Being placed on the wrong tax code
- Finishing one job and starting another while receiving pay from both in the same month
- Starting to receive a workplace pensionÂ
Overpayments can also arise when someone has multiple sources of income or when their circumstances change during the tax year.
People with more than one source of income should pay particular attention. Each source of income may appear to be taxed correctly in isolation, while the taxpayer’s overall position still results in an overpayment once all of their income and allowances are taken into account.
What is a P800 tax calculation?
After the end of a tax year, HMRC reconciles PAYE records to establish whether the correct amount of tax has been collected. Where its figures show that an employed taxpayer or pension recipient has paid too much or too little, HMRC may issue a P800 tax calculation.
The P800 sets out HMRC’s calculation of the income on which you should have paid tax, the tax it believes was due and the amount that has actually been paid. If the calculation shows that you have paid too much, it should also tell you what happens with the resulting tax repayment.
Receiving a P800 showing an overpayment is good news, but the figures should still be checked. Compare the income and tax deducted with your own records and make sure the sources of income shown by HMRC are correct. If something does not look right, it is better to resolve the discrepancy before assuming the repayment figure is accurate.
HMRC says you’re due a tax repayment – what happens next?
The next step depends on what your P800 tells you, so taxpayers should not assume that every HMRC tax repayment is dealt with in exactly the same way.
If your letter says that you can claim the repayment online, you will need to make the claim. This can be done using HMRC’s online service and, for taxpayers with a UK bank account, through a Personal Tax Account or the HMRC app. HMRC currently states that an online repayment should normally be received within five working days.
In other circumstances, the P800 may say that HMRC will send you a cheque. Where this applies, HMRC says the cheque should arrive automatically within 14 days of the date shown on the letter.
The safest approach is to follow the instructions on your own P800 rather than relying on what happened with a previous repayment or somebody else’s experience. Being told that you have overpaid tax does not necessarily mean the next step will be the same in every case.
Before claiming, check that HMRC has got it right
Discovering that you are due money may make it tempting to go straight to the repayment process, but the calculation should be reviewed first. The repayment shown on your P800 is only as reliable as the information HMRC has used to calculate it.
Check the employment and pension income shown against your own records, together with the tax deducted and the tax codes used during the year. You should also consider whether all relevant income has been included and whether anything appears to have been duplicated.
There is another reason to understand the cause of the overpayment. Receiving the money may solve the immediate problem, but it does not necessarily correct the underlying cause. If an incorrect tax code or inaccurate information remains on HMRC’s records, the same issue could affect deductions in a later year.
For some taxpayers, the more important question is therefore not simply, “How do I claim my tax repayment?” but “Why did I overpay tax in the first place, and could the same problem happen again?”
How far back can you claim overpaid tax?
Receiving a repayment for the latest year may also provide a reason to look at your position in earlier years. If the overpayment arose from an issue that persisted for some time, the same problem may have affected more than one tax year.
Claims for repayment of overpaid Income Tax are normally subject to a four-year time limit from the end of the relevant tax year. Someone who discovers a recurring error should therefore consider whether earlier years also need to be reviewed rather than assuming the latest P800 tells the whole story.
This can be particularly relevant where the cause of the overpayment was not a one-off event, but an ongoing issue with the information used to calculate your tax.
Do you need a tax repayment company?
Tax repayment companies offer to submit claims to HMRC on behalf of taxpayers, usually in return for a fee or a proportion of the repayment received. However, eligible repayment claims can be made directly to HMRC without paying a third party simply to process the claim.
Professional tax advice serves a different purpose. If your affairs involve several sources of income, earlier tax years or a calculation that does not appear correct, the issue may be establishing how much tax you should have paid rather than simply submitting a claim for the figure HMRC has provided.
Watch out for HMRC tax refund scams
A message saying that you are owed a tax repayment can seem more convincing when you already know that HMRC is reviewing millions of PAYE records. That makes it particularly important to be cautious about unexpected emails or text messages asking you to follow a link to receive a refund.
Rather than using links in unexpected messages, check your position independently through GOV.UK, your Personal Tax Account or the official HMRC app. Be especially wary of communications that ask for personal, banking, or card information, or suggest that you must act immediately to avoid losing a refund.
When might professional tax advice help?
For many taxpayers, checking a P800 and claiming a repayment will be relatively straightforward. Advice may become more useful where there are several sources of income, employment and pension income are received together, or property and investment income are also involved. Repeated tax code problems, or evidence that earlier years may be affected, can also justify a review of the wider position.
In these circumstances, the question is no longer simply how to claim a repayment. Reviewing the wider tax position can establish whether HMRC has used the correct information, whether the offered repayment is accurate, and whether the cause of the overpayment needs to be corrected to prevent the problem from recurring.
Don’t leave a tax repayment unclaimed
With around 45 million PAYE accounts being reviewed and taxpayers reportedly due hundreds of millions of pounds in repayments, HMRC’s current reconciliation exercise is worth paying attention to. If you receive a P800 showing that you have overpaid tax, check the figures carefully and establish what action you need to take to receive the money.
Claiming a tax repayment may only be part of the issue. Understanding why too much tax was paid can help identify incorrect information, recurring tax code problems or earlier years that also need attention.
If you have received a P800, believe you may have overpaid tax or are concerned that HMRC’s calculation does not reflect your circumstances, Wilkins Southworth can review the calculation, consider why the overpayment arose and establish whether any further action may be required.
Contact one of the team to discuss your circumstances and find out how our personal tax advisory services can help.