Millions of taxpayers are being urged by HMRC to check if they are eligible for a tax refund, with the average refund amounting to £473. One common reason for overpaid tax is being assigned the wrong tax code, especially after a job change. The prevalent tax code for the current year is 1257L, allowing individuals with one job or pension to earn £12,570 before being taxed.
Other factors leading to overpaid tax include incorrect splitting of personal allowance for individuals with multiple jobs and excess tax deductions on pension income. HMRC has announced the distribution of approximately four million P800 tax refund letters and encourages recipients to verify if they are owed money.
Taxpayers can locate their tax code on recent payslips, P45 forms post-employment, or the GOV.UK website with a Government Gateway ID. To claim a refund, individuals can utilize the reference number on the P800 letter and their National Insurance number on the GOV.UK platform. Refunds can be claimed for up to four previous years if the tax code was misallocated.
HMRC may extend refund periods beyond four years in specific cases where they are at fault for overpaid tax. MoneySavingExpert.com cautions against scammers posing as HMRC and emphasizes that HMRC communicates about owed taxes through letters, not texts, emails, or calls.