Tens of thousands of Britons are missing out on getting tax rebates because they are not cashing cheques sent to them by HMRC, The i Paper can reveal.
Every year, millions of people who overpay income tax receive a letter from HM Revenue & Customs (HMRC) telling them how to request a rebate. These overpayments can happen for multiple reasons, for example if someone changes jobs part way through a year or is mistakenly put on the wrong tax code.
Historically, if they didn’t respond within 21 days, the taxman would issue a cheque to the address on file for them, but every year, tens of thousands of these cheques remain uncashed and so taxpayers miss out on getting money owed to them.
HMRC has been trying to reduce the number of cheques it issues for several years, but figures obtained by The i Paper via Freedom of Information request show it still issued 1,746,720 last year, of which 178,180 were never cashed.
These cheques had a combined value of £144m, meaning taxpayers each missing out on around £800.
The number issued used to be far higher, but since 2024, HMRC has been transitioning to a new process whereby unless customers ask specifically for a cheque, it instead tries other ways to contact them.
But it says around 20 per cent of taxpayers have not yet been moved to the new system. It’s aiming to complete the switch by the end of the financial year, next April.
Experts said the figures highlighted how parts of the tax system were “still struggling to keep pace with a digital economy”.
Robert Salter, a partner at tax and accountancy firm Blick Rothenberg said: “It is certainly a bit problematic that HMRC continues to use cheques to settle tax refunds in so many cases.”
But he also urged taxpayers to respond to HMRC correspondence.
“Until people do consistently open their HMRC correspondence, there is always going to be a problem and delays with the tax refund process,” he said.
Shaun Moore, tax and financial planning expert at wealth manager Quilter, added: “The data highlights how some parts of the tax system are still struggling to keep pace with a digital economy.
“Overpayments are common, often caused by people changing jobs, being put on the wrong tax code, or having multiple sources of income during the year. Those issues are unlikely to disappear, which makes the way refunds are corrected and repaid even more important.
“Where a repayment is required, it is encouraging that HMRC is issuing fewer cheques, as paper payments carry a higher risk of delay or going unclaimed. While there will always be limited cases where a cheque is unavoidable, a faster shift towards digital processes would reduce friction and help ensure overpaid tax reaches people more reliably and promptly.”
What to do if you have missed out cashing a HMRC cheque
If HMRC sends you a P800 letter – which it usually does from around June following the end of the tax year in April – it will tell you to request a refund via a bank transfer known as BACS. This can be done by logging into your government gateway account. If you don’t have one of these, you can set one up using the government website.
If you have an uncashed cheque from HMRC that was issued over six months ago, you will no longer be able to cash it.
HMRC says it can be replaced on request. You can contact it online, or by phone, on 0300 200 3300.
There’s technically no time limit on doing this, but after nine years, it becomes harder for HMRC to verify if you’re owed a refund, so it’s best to request a new cheque before this date.
An HMRC spokesperson said: “The vast majority of pay as you earn (PAYE) repayments are issued via bank transfer, which is now the default option, and the quickest and most secure way for customers to receive their money.
“Customers can still request to receive their repayment via cheque and it’s their responsibility to cash it if they choose this method.”
Cashing a cheque is typically done in a bank branch, although many banks will now allow customers to do so digitally, using a scanning service.
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