HMRC letter could mean you are due hundreds - but you must do one thing

HMRChas issued a fresh warning urging Britons to look out for a vital letter that could reveal they're entitled to potentially thousands from the taxman. But these taxrebates are not handed out automatically, meaning those who disregard the correspondence and claiming guidelines willlose out.

The revenue department posted on X: "Received a letter saying you have a tax refund to claim? There could be an average of £473 waiting for you."

The letter in question is the P800 Tax Calculation. These are sent to people that HMRC believes has either overpaid or underpaid tax.

It details precisely what went awry with your tax calculation and how to rectify it - either by reclaiming your excess tax from HMRC or settling the remainder of your tax liability.

Guidance on how to proceed is typically included in the correspondence and can be accessed on the Gov.uk website. Alternatively, the letter might state that HMRC is posting you a cheque, meaning you will not need to contact the authority to claim your rebate as you should receive the cheque automatically within 14 days of the date shown on your letter.

Earlier this summer, HMRC revealed that nearly one million people had yet to claim their tax rebate. Approximately four million P800s were anticipated to be dispatched this summer, with the final remaining correspondence expected to arrive by November 30, 2025.

Only people who are employed or receive a pension will receive these letters. Anyone else registered for Self Assessment tax returns will have their tax liability automatically adjusted.

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Tax refunds can be a hefty sum, potentially amounting to thousands of pounds, and these claims can be backdated up to four years. This means that people who received P800 letters as far back as 2021 might still be eligible to claim their cash.

As P800 letters continue to land on doormats across the country, experts have issued warnings about fraudsters looking to exploit the situation. Money-Saving Expert has highlighted that scammers may attempt to impersonate HMRC members and offer these refunds via text, email, or phone call.

However, this is often the biggest clue that it is a scam, as HMRC will always contact taxpayers by post if they are due a tax refund, not online, although the claim process can be completed digitally. HMRC will also never request a payment or randomly contact you to confirm banking details.

The Gov.uk website features anonline checker tool where people can verify if they are owed a tax refund from previous years. Most tax refunds occur because people have overpaid income tax due to complications during the tax year such as changing jobs or having multiple sources of income.

This could include overpaying tax on pension, income from employment, redundancy payments, UK income for those living abroad, foreign income for those residing in the UK, and interest from savings or payment protection insurance. One of the most common reasons for paying the incorrect amount of tax is having the wrong tax code.

HMRC assigns each person a tax code based on their earnings, which determines their personal allowance. This is the amount you can earn annually before you are required to pay income tax.

The most common code, 1257L, applies to people with a single income from employment or pension, indicating a personal allowance of £12,570.

Emergency tax codes, denoted by 'W1', 'M1', or 'X', may be assigned if you've switched jobs or transitioned from self-employment to working for an employer. While these tax codes are temporary, they do influence the amount of tax you pay while in effect.