More than 730,000 PAYE refunds went unclaimed last year, with the average refund worth £855, according HMRC’s figures. Employees and pensioners are now being encouraged to check if they are due a PAYE tax refund.
What is a PAYE refund?
PAYE (Pay As You Earn) is the system through which tax is deducted directly from employment and pension income. Where a refund is owed, HMRC issues a P800 tax calculation letter after the end of the tax year, setting out the amount due.
However, since 31 May 2024, HMRC no longer pays out these refunds automatically. It’s now the taxpayer’s responsibility to actively claim.
This can be done via:
- The HMRC app
- The online bank transfer service
- Your personal tax account
- A cheque request
Before claiming, you would need to check that you agree with the figures on your P800 and that nothing is missing. HMRC recommends the app as the quickest and easiest route. For other methods, you’ll typically need your P800 reference number and National Insurance number to hand.
Why might you be owed a refund?
A refund doesn’t necessarily mean anything went wrong with your payroll. It most commonly arises from an incorrect or outdated tax code, or from not receiving your full personal allowance for the year. Typical situations include:
- Not working for the full tax year
- Changing jobs or working hours during the year
- An incorrect state pension amount being included in your tax code
Once a claim is submitted, online refunds generally arrive within five working days. Cheques can take up to six weeks. In more complex cases, particularly those spanning more than one tax year, HMRC may issue a cheque at its own discretion.
A note for employers
Employers aren’t able to claim P800 refunds on behalf of their staff — the reconciliation process happens after the tax year ends and payroll is finalised. That said, HMRC’s February 2026 Employer Bulletin encourages employers to remind their employees to check their position and submit a claim if one is due. Many employees without additional income sources may simply not be aware that the responsibility now sits with them. If you’d like to find out more, please don’t hesitate to contact us on hello@ormerodrutter.co.uk or 01905 777600.
