7.5million people due HMRC tax refund - what you need to look out for

HM Revenue and Customs (HMRC) is sending out letters to approximately 7.5 million individuals who are due a tax refund. In some instances, the process will be automatic and recipients will receive a cheque, but in other cases, action will be required, officials have warned.

Finance experts at RIFT have stated that HMRC is currently distributing P800 forms. A P800 is a tax calculation carried out by HMRC to ensure everyone is paying the correct amount of tax.

If HMRC determines that an individual has either overpaid or underpaid tax, they will send a letter containing a P800 form. The majority of P800 cases affect PAYE employees rather than self-employed individuals.

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If HMRC calculates that you have overpaid tax, you will be entitled to a refund. Conversely, if you have paid too little, you may receive a bill.

If the news is positive, the P800 letter will instruct you on how to claim your refund. Previously, everyone automatically received a cheque, but those who are BACS eligible will now need to take action to claim their repayment, reports the Manchester Evening News.

The quickest way to make this claim is through HMRC's P800 refund website or the HMRC mobile app. However, if you're not given this option, or if you don't act within 21 days of the form being issued, further action may be necessary to avoid missing out.

If your tax calculation letter states that you can claim online

You can also claim a refund:

• You can claim using the online bank transfer service or request a cheque online. You’ll need:
• the reference number from your P800 letter your National Insurance number

You can also claim a refund:

• through your personal tax account
• through the HMRC app
• by contacting HMRC and asking them to send you a cheque

When you’ll get your refund

• 5 working days if you’ve claimed online
• 6 weeks if you’ve asked HMRC to send you a cheque

If you're informed that you've underpaid your tax, you'll be notified of the amount you owe. This so-called PAYE Debt will need to be settled with HMRC as soon as possible.

If you're unable to pay it all at once, you'll have the option to spread the payments over time.

Bradley Post, MD of RIFT, commented: "HMRC's PAYE system is an extraordinary machine of tax collection, but it isn't perfect and millions of mistakes are made every year. However, HMRC's internal check and balances system means that it often spots these mistakes in hindsight and does all it can to ensure people are either refunded, or top up what they owe."

He added: "It's essential that everyone who pays their tax through the PAYE system, which is most people who are not self-employed or own their own business, keep a close eye on the post over the coming months because you could have some very good news coming your way."

"While HMRC does what it can to help people pay the correct amount of tax and claim refunds when appropriate, some people's situations are more complicated than most, and they might benefit from appointing some tax refund experts to ensure that they receive every penny that is owed to them."