Automatic tax refund cheques to stop

There may be better things in life, but you can’t deny it’s nice to get a tax refund cheque in the post.

Sadly, that experience is set to die out for many employees who have paid too much income tax.

If you pay too much tax, you’ll normally get a tax calculation letter. This gives you instructions on how to claim a tax refund online. Until now, if you didn’t claim the refund within 21 days, HMRC would post you a cheque. The taxman stopped sending these cheques from 31st May 2024.

In this post, we look at why you might be due a tax refund. We’ll also show you how to claim a tax refund online.

Why might I have paid too much tax?

There are various reasons why you might pay too much tax as an employee. Common ones include:

• You were put on the wrong tax code. This normally happens when HMRC doesn’t have accurate information about your income.
• You’ve finished one job and started another one, but have been paid by both in the same month.
• You’re still working, but you’ve begun to receive a pension.
• You’ve started to receive Employment and Support Allowance or Jobseeker’s Allowance.

A word about tax codes

If you have been put on the wrong tax code, there are steps you can take to sort this out.

If you’ve been put on an emergency tax code, HMRC will normally update it when you or your employer provide them with correct details. This can take up to 35 days. However, if you’ve paid too little tax, you may stay on the emergency code until you’ve paid the right tax for the year.

If you think HMRC has put you on the wrong (non-emergency) tax code, you have two options. You can either use the Check Your Income Tax online service to update your employment details or tell HMRC about a change in income. For example, you can tell HMRC about company benefits, missing income or employers, or update your estimated taxable income.

If you can’t use the service for any reason, you will need to contact HMRC.

Claiming your tax refund

Now that HMRC has stopped sending out tax refund cheques, you’ll need to claim any refund online. To do this, you will need the following information:

• The reference from your P800 letter
• Your national insurance number

You can then claim your refund online via this page. Alternatively you can claim a refund via your personal tax account or through the HMRC app. If you claim in these ways, you’ll get your refund within five working days.

That said, if you’re determined to get a cheque, you can contact HMRC and ask them to send you one. If you do this, though, you may have to wait up to six weeks to be paid.

Why does HMRC no longer send automatic tax refund cheques?

HMRC presumably wants to switch from cheques to direct bank payments to keep down costs. A cynic might wonder whether they’re hoping fewer people claim their tax refunds. Whatever the reasons, keep an eye out for tax refund letters and be sure to claim what you’re owed.