State pension tax error warning as HMRC reveals £624million in unclaimed refunds

Temie Laleye
Thu, 16 Apr 2026 08:25:00 +0000

Pensioners across the UK are being urged to check whether they have overpaid tax, with hundreds of thousands of refunds going uncollected each year.

According to HMRC figures released in February, approximately 730,000 tax refunds remained unclaimed last year, totalling £624million.

The typical refund stood at £855.

Retired individuals may find themselves affected when an incorrect state pension amount has been factored into their tax code.

Those who suspect they have been overcharged but have not received a tax calculation letter from HMRC can find guidance on the revenue authority's website explaining how to submit a claim.

The deadline for reclaiming overpaid tax is four years from the end of the relevant tax year.

Adelle Greenwood, tax manager at the Institute of Chartered Accountants in England and Wales, said: "With more than 700,000 people missing out on a total of £624mn in tax refunds last year, we'd encourage all taxpayers to check whether they are owed money from HMRC."

She added: "Employees who do not have other sources of income may not have realised that it is their personal responsibility to make the claim and are encouraged to do so now."

Ms Greenwood noted that HMRC has recently requested employers to prompt their staff to verify whether they qualify for a refund and to file a claim where applicable.

Employers themselves cannot submit P800 refund claims on behalf of their workers.

Taxpayers must act within four years of the end of the tax year in question to recover any money owed to them. Once this window closes, unclaimed funds are forfeited permanently.

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Individuals who are due a repayment will generally receive a P800 tax calculation letter from HMRC, which sets out the amount they can reclaim.

However, a crucial change means that refunds are no longer paid out automatically. Instead, taxpayers must take action themselves to secure the money.

Before submitting any claim, individuals should review their P800 document thoroughly to confirm all details are correct. They will require both their P800 reference number and national insurance number to proceed.

The fastest method to claim a refund or verify eligibility is through the HMRC app. Alternatively, taxpayers can use their personal tax account on the HMRC website to arrange a bank transfer, or they may request payment by cheque.

Claims made online are typically processed within five working days, whereas those opting for a cheque should expect to wait up to six weeks.

Tax specialists have identified several common causes of overpayment, including outdated or inaccurate tax codes, mistakes in payroll processing, and situations where someone has not worked for an entire tax year.

The P800 reconciliation process takes place after the tax year concludes, once payroll records have been finalised.