Many taxpayers are still unaware that overpayments are no longer automatically refunded, despite changes coming into place nearly two years ago.
Experts warn this could lead to a rise in scammers targeting people, claiming to be HMRC.
Previously, pay as you earn (PAYE) taxpayers were automatically refunded any tax overpayments they made but that changed in May 2024. Yet many still do not know about this.
Lack of awareness could lead to increased scam exposure, experts say, as well as people missing out on refunds for overpayments.
Mohammad uz-Zaman, a wealth manager at ADL Wealth, said: “There may be a ramp up in texts and emails claiming a HMRC refund. The victim could be expecting a refund too and think mistakenly that such a ‘timely’ message was genuine.”
HMRC said it made the changes so customers can get repayments quicker by bank transfer than by cheque, adding claiming online means the customer verifies their identity, reducing the risk of fraud.
‘The changes concern me’
Ellie Scoulding, 24, from London, is a hairdresser and admits she did not know about this change in the rules.
In the past she has received an overpayment refund of a few hundred pounds from being put on an emergency tax code after changing jobs.
She said: “It concerns me that it’s becoming more of a one-sided burden on the taxpayer to co-ordinate their own income and tax.
Ellie Scoulding, 25, had no idea about the changes and felt they could have been communicated better“HMRC are able to be diligent in collecting owed tax but can’t return that sentiment to those they owe.”
A lack of awareness of these changes could lead to large sums of tax overpayments being left unclaimed.
Alasdair Walker, a financial planner at Optimum Path Financial Planning, said he was concerned it could lead to people having no idea they have overpaid tax which they need to manually claim and not being able to do it online.
He said: “If you’re not IT-literate you have to fill out a paper form and post it to them. It’s a whole lot of sludge added to a process.”
Leanne Gunns, an accountant at My Profit Hero, said it was right that people might have refunds they are not aware of and should be told if they do.
“HMRC may send you a tax calculation letter called a P800 detailing the overpayment that can then be claimed online. However these can be delayed or missed altogether meaning some people leave the repayments unclaimed for many years,” Gunns said.
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How to manually claim back tax
If you’ve paid too much or too little tax by the end of the tax year (5 April), HMRC will send you either a tax calculation letter (also known as a P800) or a simple assessment letter.
You will only get this if you are employed or receive a pension. Letters are sent out between June and March of the following tax year.
People who think they may have overpaid on tax need to go to the HMRC app and click on the “Pay as you earn” section.
If you have overpaid tax, there will be a green “claim” button you can click which will begin the process of refunding the tax to your bank within one week.
Uz-Zaman, of ADL Wealth, said: “It becomes even more important to be on top of your bookkeeping and ensure you have access and are familiar with the Government Gateway Interface. It’s a bit daunting for first-timers but it’s quite straightforward once you get acquainted.”
According to HMRC, the quickest and easiest way for people to claim their refunds or check if they are eligible for one is by downloading the HMRC app.
A spokesperson for HMRC said: “We contact all customers who’ve overpaid tax so they can claim their repayment quickly and easily via the HMRC app or online, as well as providing options for those who aren’t online.
“Our change in approach reduces the risk of fraud, saves taxpayer’s money, and means quicker repayments for customers. We’re absolutely committed to tackling tax scams, including via extensive education and support for customers.”
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