Recent changes by HM Revenue & Customs (HMRC) have altered the method for processing PAYE refunds.
Instead of issuing automatic cheque refunds for PAYE overpayments, taxpayers must now actively claim their refunds online.
This change aims to streamline processes and reduce potential fraud.
Why has HMRC changed the process?
Previously, if a taxpayer did not claim their PAYE refund online within 21 days of receiving a P800 tax calculation letter, HMRC would automatically send a cheque. However, this system has been phased out.
The new approach encourages taxpayers to use online services, which are more efficient and less susceptible to fraud.
What you need to do
If you have overpaid tax and are entitled to a PAYE refund, you will need to take specific steps to claim your money. Between June and the end of November, HMRC will issue P800 letters to those who have overpaid.
This letter will detail your tax calculation and any overpayment.
How to claim
The quickest method is through HMRC’s online service. You’ll need your P800 reference number and National Insurance number.
Opting for an online bank transfer will ensure you receive your refund within five working days.
If you prefer a cheque, you can request one through the online process. Note that cheque issuance can take up to 42 days.
For those unable to use the online service, HMRC offers alternative routes:
- Claiming your refund through your personal tax account.
- Contacting HMRC directly to request a cheque.
Employers should inform their PAYE staff about these changes to ensure everyone is aware of the new procedure.
Benefits of the new system
While this change requires an extra step from taxpayers, it offers several advantages:
- Online claims lead to quicker refunds, with bank transfers completed in just five working days.
- By minimising the number of cheques sent through the mail, the risk of fraud and theft decreases.
- Encouraging online claims helps HMRC streamline their processes and reduces administrative burdens.
Final reminders
Be on the lookout for your P800 tax calculation letter and follow the provided instructions to claim your refund promptly.
For more detailed information and assistance, please get in touch with us today.