HMRC warning as thousands of Brits may be owed from £624m refund pot

Workers are being urged to check whether they are owed money by HMRC, after figures showed more than 730,000 PAYE refunds went unclaimed last year, with the average unpaid repayment worth £855. The unclaimed refunds were worth around £624 million in total, according to ICAEW, which said the figures were based on HMRC data. The warning is particularly timely now because the 2025/26 tax year has ended, the 2026/27 tax year is underway, and many workers and pensioners will soon be checking payslips, tax codes and HMRC letters to see whether they paid the right amount last year.

Thomas Drury, money-saving expert at The Investors Centre, says the biggest danger is assuming that a refund will always arrive automatically.

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He said: “People hear the word PAYE and assume everything is handled for them. But PAYE is only as accurate as the information behind it. If your tax code was wrong, your job changed, your pension income changed, or HMRC did not have the full picture at the right time, you may have paid more tax than you needed to.”

He adds: “The worrying part is that many people do not realise they have to take action. A refund can be due, but if you ignore the letter or do not check your account, that money can sit unclaimed.”

HMRC may send a P800 tax calculation letter if someone has paid too much or too little tax. GOV.UK says the letter tells people how to get a refund if they are due one. If the letter says they can claim online, they can claim through the online bank transfer service, their personal tax account, the HMRC app, or by contacting HMRC.

Drury says this is where people often lose momentum: “A P800 is not something to throw in a drawer. It is a calculation of whether you paid the right amount of tax. If it says you are due a refund, you need to read exactly what it tells you to do. Some people assume HMRC will just send the money automatically, but that is not always the case. If the letter says you need to claim, you need to claim.”

There is also a time limit. ICAEW says taxpayers have four years from the tax year in which PAYE was paid to claim a refund.

Drury added: “That deadline matters. This is not money you should leave until later. If you are owed a refund, it is your money, and there is no reason to let it sit there unclaimed.”

The refund warning is not just for people with complicated finances. Drury says ordinary workers can be affected if their circumstances changed at any point during the tax year.

“If you changed jobs, had a gap between jobs, worked multiple jobs, received a bonus, started taking pension income, or were placed on an emergency tax code, you should be checking. Those are exactly the moments where PAYE can become messy,” Drury warned.

He also says pensioners should not ignore the issue.

“Pension income can be taxed through PAYE too. If someone has more than one pension, has started drawing income, or has changed how they receive pension payments, it is worth checking whether the tax taken was correct.”

The same applies to people who moved from work into retirement, reduced their hours, or stopped working part-way through the year.

“Tax is calculated across the year. If you only worked for part of it, you may have paid tax as though you were going to keep earning at the same pace all year. That can create overpayments.”

Drury says the first step is to log into your personal tax account or HMRC app and check your tax code, income record and whether HMRC says a refund is due. GOV.UK says a personal tax account can be used to check an Income Tax estimate and tax code, claim a tax refund, and check how much Income Tax was paid in previous years.

“The important thing is to compare HMRC’s information with your own records. Look at your payslips, your P60, your P45 if you changed jobs, and any pension statements. If something does not match, do not ignore it.”

The expert also told people to pay close attention to tax codes on their pay slips.

He added: “The standard tax code is not right for everyone. Your code can change if you have benefits from work, multiple jobs, pension income, previous underpayments or other adjustments. Do not just glance at it. Ask whether it actually reflects your situation.”

If someone receives a P800 and it says they are due a refund, GOV.UK says online claims are usually paid within five working days, while cheque claims can take six weeks.

“That is another reason to act quickly. If you can claim online through the official route, it is usually faster than waiting for paper processes.”

Drury also warns people to be careful with refund firms that offer to claim money on their behalf.

He said: “There are legitimate services out there, but many people do not need to pay someone to claim a straightforward PAYE refund. If HMRC has written to you, or your personal tax account shows a refund, start with the official GOV.UK route. Otherwise, you could end up giving away part of your own money unnecessarily.

“Tax refund messages are one of the areas scammers love because people get excited by the idea of money coming back. Do not click random links in texts or emails. Go directly through GOV.UK or the HMRC app.”

​The expert concluded: “Most people are not tax experts, and they should not have to be. But everyone should know how to check whether they have paid the right amount. If you are owed money, claim it. If your tax code is wrong, fix it. And if you receive a letter from HMRC, open it and read it properly. The worst thing you can do is ignore it, because that could mean leaving hundreds of pounds with HMRC that should be back in your own account.”