Pensioners in the UK should check if they have paid too much tax because hundreds of thousands of refunds are not being collected each year.
HMRC figures from February show that around 730,000 tax refunds were not claimed last year & these were worth £624 million in total.
The average refund was £855.
Retired people may be affected when the wrong state pension amount has been used in their tax code.
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Those who think they have paid too much but have not received a tax calculation letter from HMRC can find information on the revenue authority’s website about how to make a claim.
The deadline for claiming back overpaid tax is four years from the end of the tax year in question.
Adelle Greenwood is a tax manager at the Institute of Chartered Accountants in England and Wales. She said that with more than 700000 people missing out on £624 million in tax refunds last year all taxpayers should check if they are owed money from HMRC.
She added that employees who do not have other income sources may not have known that it is their own responsibility to make the claim and they should do so now.
Ms Greenwood noted that HMRC has recently asked employers to remind their staff to check if they qualify for a refund and to file a claim if they do. Employers cannot submit P800 refund claims on behalf of their workers. Taxpayers must act within four years of the end of the tax year to recover any money owed to them. Once this period ends the unclaimed funds are lost permanently.
People who are due a repayment will usually receive a P800 tax calculation letter from HMRC that shows the amount they can reclaim.
However an important change means that refunds are no longer paid out automatically. Instead taxpayers must take action themselves to get the money. Before submitting any claim people should review their P800 document carefully to confirm all details are correct. They will need both their P800 reference number and national insurance number to proceed. The fastest way to claim a refund or check eligibility is through the HMRC app. Taxpayers can also use their personal tax account on the HMRC website to arrange a bank transfer or they can request payment by cheque. Claims made online are usually processed within five working days while those choosing a cheque should expect to wait up to six weeks. Tax specialists have identified several common reasons for overpayment including outdated or incorrect tax codes and mistakes in payroll processing. Other situations include cases where someone has not worked for a full tax year. The P800 reconciliation process happens after the tax year ends once payroll records have been completed.
