Almost six million workers could be owed a refund by HMRC after overpaying tax, new research suggests. And it’s entirely your responsibility to apply for it.
New figures obtained through a Freedom of Information request show 5.6 million Brits paid too much tax last year, totting up to a whopping £3.5 billion across the country.
Some workers are due thousands of pounds, but you may not realise it.
The most common reason for being charged too much tax is because you’ve been assigned an incorrect tax code, according to accountancy firm UHY Hacker Young, which submitted the FOI. Here’s how to check if you’re owed a payout.
What is a tax code and how can I check mine?
A tax code is a series of numbers and letters – for example 1257L, S1257L, C1257L, BR, and K497 – that are used to calculate the amount of tax that should be deducted from your wage before it hits your bank account.
You can find your tax code on your payslip if you’re a full-time or part-time employee taxed via the pay-as-you-earn (PAYE) system. Not everyone is paid via this system, though. For example, self-employed people or those with other taxable income (ie landlords) have to submit a Self Assessment instead.
Now’s the trickier part: how to tell if you’re on the correct code or not. Money Saving Expert has an online calculator, which compares your current tax code to the most common one for your salary. If it doesn’t match, it could suggest you’re on the wrong code – though you’ll need to contact the tax office to be sure.
Why might HMRC issue me with an incorrect tax code?
According to UHY Hacker Young, this frustrating blunder of bureaucracy happens due to HMRC:
- Assuming that an employee is still receiving company benefits-in-kind such as company cars, healthcare and even gym memberships even though they may no longer be receiving that benefit
- Making incorrect assumptions about an employee’s additional income, such as rental income, dividends or freelance work that they are no longer doing
- Confusion over how many jobs an individual is currently working
- Holding out-of-date or late employer payroll information.
I think I’ve been overcharged, what do I do?
If you think the tax code you’ve been assigned is incorrect and you’ve overpaid tax, you can call HMRC on 0300 200 3300, use the HMRC app, or contact HMRC online via your personal tax account.
Neela Chauhan, partner at UHY Hacker Young, emphasised that is really is your responsibility to do, as HMRC is under no obligation to check PAYE tax codes and tell employees if they have overpaid.
‘Millions of people are paying the wrong amount of tax simply because HMRC is almost guessing what they earn,’ she said.
‘For too many people, this will go completely unnoticed. Individuals must check their tax codes and year-end PAYE summaries for mistakes. Particularly those with any form of non-PAYE income or company benefits.’
An HMRC spokesperson said: ‘Everyone is responsible for ensuring their own tax code is correct, and they can manage and update their details quickly and easily via the HMRC app or their online tax account.’
When will my refund arrive?
Earlier this week, an investigation by The Guardian uncovered how people are waiting for more than a year for HMRC to refund overpayments on tax and national insurance contributions.
Self-employed construction worker Simon Hughes shared how he and his wife couldn’t afford to go on a honeymoon until he receives £4,550 of overpaid tax he claimed last April.
‘The last time I contacted HMRC, it said I could be waiting until July 2026,’ he said. ‘When people owe it money, they get fined for late payment, but when it owes money, it can take as long as it likes without penalty.’
HMRC said it was investigating the cases raised by the paper, adding: ‘We receive millions of tax refund claims every year, and the vast majority are paid promptly, but we apologise to those experiencing a delay. We’re committed to cutting wait times and are investing £500m in digital services to speed up refunds as well as help customers pay the right tax first time so fewer refunds are necessary.’
