More than 170,000 miss out on £800 HMRC tax rebate due to ‘problematic’ system
Hundreds of thousands of taxpayers are missing out on HMRC refunds worth an average of £800, new statistics show.
Millions of people pay too much tax every year for various reasons; This means they need to get a rebate from HMRC to be reunited with their money. The tax office sends a letter to these people every year, informing them how they can make a request.
Until 2024, recipients had 21 days to respond or a check would be mailed to their registered address. But hundreds of thousands of them still remain cashless.
Last year HMRC issued 1.7 million checks for discounts owed, of which 178,180 were never cashed. Figures obtained by I uncover. The total value of these discounts was £144 million, meaning each individual missed out on an average of £800.
HMRC has been working to reduce the number of checks it issues in recent years, with the figure falling from 4.1 million in the 2023-2024 tax year. The tax office began moving to a new system in 2024 in which it tries to communicate with customers through other means unless they themselves request a check.
Robert Salter, partner at tax and accounting firm Blick Rothenberg, said: “It is certainly a bit problematic that HMRC continues to use checks to pay tax refunds in many cases.”
What are the most common reasons for paying too much tax?
You may owe a rebate if:
- If you were given the wrong tax code by HMRC or your employer
- I finished one job, started another and got paid for both in the same month
- You started receiving your pension before you retired
- Employment and support allowance or job search allowance received
He added: “Until people open HMRC correspondence consistently, there will always be problems and delays in the tax refund process.”
Most people will receive a P800 letter around June informing them that they are owed a tax deduction, following the tax year ending in April. This instructs the recipient to request payment via a bank transfer called BACS. This is done by logging into the government gateway account, which can be opened at any time.
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People with an uncashed check from HMRC will not be able to cash it after six months, but this does not mean the check is invalid. A new currency can be issued upon request and there is technically no time limit to convert it into cash. But after nine years, it may become difficult for the tax office to verify the deduction.
An HMRC spokesman said: “The vast majority of PAYE refunds are made via bank transfer, which is now the default option and the fastest and safest way for customers to receive their money.
“Customers can still request to receive their refund by check, and it is their responsibility to convert the money into cash if they choose that method.”
