HMRC Updates PAYE Repayment Process: What Taxpayers Need to Know

In a significant change to the Pay As You Earn (PAYE) system, HMRC has revised its approach to tax repayments. This update affects employees who may have overpaid taxes during the 2023/24 tax year.

Key Changes in HMRC’s PAYE Repayment Process:

1. No More Automatic Cheques: HMRC has discontinued its practice of automatically issuing cheques for tax repayments. As of 31 May 2024, employees must actively claim their refunds.
2. Annual Tax Reconciliation: HMRC continues to perform annual checks on employee tax payments under PAYE. The 2023/24 tax year reconciliations are currently underway.
3. Notification of Overpayments: If an overpayment is identified, often due to incorrect tax codes, HMRC will inform the employee via letter. These notifications typically arrive between June and November following the tax year’s end.
4. New Claiming Process: The tax calculation letter now includes detailed instructions on how to claim repayments. This process accommodates both online claims and alternative methods for those unable to use digital services.
5. Cheque Option Still Available: While not automatic, employees can still request a cheque through the new claiming process if preferred.

For more detailed information on these changes, taxpayers are encouraged to consult HMRC’s official guidance on tax overpayments and underpayments.

By staying informed about these updates, employees can ensure they receive any tax repayments due to them promptly and efficiently.