Understanding the new process for PAYE refunds

The recent announcement by HM Revenue & Customs (HMRC) has introduced a change in the way PAYE refunds are processed.   Automatic cheque refunds for PAYE overpayments are no longer issued.  

This aims to encourage online claims and reduce potential fraud.  

Why the change? 

Previously, HMRC would automatically send out cheques for PAYE overpayments if the taxpayer did not claim the refund online within 21 days of receiving a P800 tax calculation letter.  

However, this system is now obsolete.  

By requiring taxpayers to actively claim their refunds, HMRC hopes to reduce fraudulent activities and encourage the use of more efficient online services. 

What does the new PAYE refund process mean for you? 

If you are entitled to a PAYE refund due to an overpayment of tax, you must now take action to receive your money.  

Between June and the end of November, HMRC will send out P800 letters to taxpayers who have overpaid tax.  

This letter details your tax calculation and indicates any overpayment. 

The easiest and quickest way to receive your refund is through HMRC’s online service.  

You will need the reference number from your P800 letter and your National Insurance number to submit a claim. 

Opting for an online bank transfer means you will receive your refund within five working days. 

If you prefer a cheque, you can request one through the online claim process. However, be aware that it will take up to 42 days (or six weeks) for the cheque to be issued. 

For those who cannot use the online service, HMRC still provides non-digital routes: 

• Claiming your refund via your personal tax account 

• Contacting HMRC directly to request a cheque be sent to you 

Employers with PAYE staff should ensure that their employees are aware of these changes.  

Benefits of the new PAYE process

While the new system requires taxpayers to take an additional step, it also offers several benefits. 

Online claims result in faster refunds, with bank transfers completed in just five working days. 

By reducing the number of cheques sent through the mail, the risk of fraud and theft decreases. 

Encouraging online claims helps streamline HMRC’s processes and reduces administrative burdens. 

Keep an eye out for your P800 tax calculation letter and follow the instructions provided to claim your refund.  

For more detailed information and assistance, please contact us today.