HMRC says nearly one million haven't claimed refund cash in new alert

HMRC has issued a fresh warning urging Brits to check whether they're entitled to cash back from the government. These tax rebates could be worth thousands of pounds, but they aren't handed out automatically, meaning people might be unknowingly losing out simply because they haven't submitted their claim.

The department posted on X: "Remember getting a letter about a tax refund, but didn't do anything about it? Last year, almost 1 million people didn't claim back the money they're owed." The letter it's referencing is the P800 Tax Calculation, which gets sent to individuals who HMRC believes have overpaid income tax.

This letter will state you're entitled to a rebate, but you'll only receive it once you make your claim online and the letter should have instructions on how to do this via the Gov.uk website.

Alternatively, the letter might indicate HMRC is posting you a cheque. In this instance, you won't need to contact the department to secure your refund as you should receive the cheque automatically within 14 days of the date shown on your correspondence.

You can claim tax refunds dating back up to four years, meaning that those who received P800 letters as far back as 2021 may still be eligible to claim their cash.

If you're unsure whether you're due a refund for this tax year or previous ones, the government's online checker tool is at your disposal.

The majority of tax refunds are due to overpayment of income tax. This can happen in several ways, such as earning income from multiple sources, frequently changing jobs within a tax year, or having an incorrect tax code.

Each person is assigned a tax code by HMRC based on their earnings, which determines their personal allowance. This allowance is the amount you can earn each year before you become liable for income tax.

1257L is the most common code and applies to people with a single income from work or pension. It indicates that their personal allowance is £12,570.

Tax codes with 'W1', 'M1', or 'X' are emergency tax codes and can be assigned to you if you've changed jobs or transitioned from self-employment to working for an employer. These tax codes are temporary but do affect how much tax you pay while they are in effect.

HMRC should update this when it has all the necessary details to assign you a regular tax code, which can take up to 35 days. However, if you remain on this code due to an error by HMRC or not providing the correct details, you could end up paying too much tax and be entitled to a refund.