In a change to a long-standing approach, HMRC will no longer automatically issue a cheque where an employee is due a repayment under PAYE. Instead, the employee must take action to receive the repayment.
After the end of the tax year, HMRC checks to see if employees have paid the correct amount of tax under PAYE. The reconciliations for 2023/24 are in progress. If an employee has paid too much tax, perhaps because they have been on the wrong tax code, HMRC will write to them and tell them that a repayment is due. Generally, letters are sent between June and November after the end of the tax year.
Previously, HMRC sent a cheque to the employee if they had not claimed the repayment online after 21 days. However, since 31 May 2024, HMRC has not issued cheques automatically; instead, the employee needs to claim their repayment.
The tax calculation letter includes instructions on how to claim the repayment, either online or via an alternative which can include requesting a cheque. It is presumably hoped that this will encourage more online applications and reduced use of cheques, as part of HMRC’s continued focus on digitalisation.
Further guidance from HMRC on tax overpayments and underpayments is available here (link) and your usual DSG contact will also be happy to assist with any related questions.
