If everything works as it should, the tax collected through PAYE should match the tax you owe for the year. But in reality, this doesn’t always happen. A change in your tax code or using the wrong one can lead to overpaying or underpaying tax. If you’ve paid too much, you might be due a refund, and HMRC will let you know.
HMRC will send out a letter if there’s a discrepancy – either a P800 tax calculation letter or a Simple Assessment letter. This will explain whether you owe tax or if you’re due a refund, along with how to claim it. These letters only go out to those who are employed or receiving a pension; if you’re in Self Assessment, any overpayment or underpayment will be handled through that system instead.
When Will You Receive a Tax Calculation Letter?
HMRC usually sends out tax calculation letters between June and November each year. You might receive one if:
- The wrong tax code was used,
- You switched jobs within the same month and were paid for both,
- You started receiving a pension,
- Or if you received Employment and Support Allowance or Jobseeker’s Allowance.
A Simple Assessment letter will be sent if you owe tax that can’t be collected through a tax code adjustment, owe more than £3,000, or have tax to pay on your state pension.
How to Claim a PAYE Refund
HMRC has recently changed how refunds for overpaid tax under PAYE are handled. Previously, HMRC would automatically send a cheque 21 days after issuing a tax calculation letter, but now, you must actively claim your refund.
The tax calculation letter will tell you how to do this. If the letter says you can claim your refund online, you can visit the Government’s website to claim via bank transfer. Alternatively, you can request a cheque.
You can also claim a refund through your personal tax account or the HMRC app. If you’d prefer, you can contact HMRC directly on 0300 200 3300 to request a cheque.
If you haven’t received a tax calculation letter but think you’ve overpaid tax through PAYE, it’s a good idea to get in touch with HMRC to check.
Need Help with Your PAYE Tax Refund?
Not sure if you’ve overpaid tax or need help claiming your refund? Jon Davies Accountants is here to help! Contact our expert team today, and we’ll guide you through the process to make sure you get what you’re owed.
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