Missed tax rebates
Over 178,000 UK taxpayers missed out on their tax rebates for the 2024-25 financial year because they failed to cash their cheques from HMRC. The value of the uncashed payments totalled £144 million – an average of around £800 per person.
The figures were revealed by the i Paper, which filed a Freedom of Information request, and has resulted in renewed pressure on HMRC to replace paper cheques with faster digital payments. Currently, HMRC issues cheques when taxpayers don’t respond to rebate letters within 21 days. This legacy process resulted in 1.74 million cheques being issued last tax year, each sent to the address that the tax authority holds on file. The cheques expire six months after the issue date, so if they reach an outdated address or get lost in the post, the intended recipient loses their window to reclaim the money in a straightforward way.
What happens to expired HMRC cheques?
If the cheque expires, it cannot be deposited in the normal way – but that doesn’t mean the rebate is lost permanently. Taxpayers can contact HMRC to either request a replacement cheque or ask for a bank transfer instead. However, HMRC may request the return of the original cheque as part of this process. If this is not possible, additional identity verification will likely be necessary.
Tax refunds for overpayments can typically be reclaimed for up to four years after the end of the relevant tax year.
Moving to a digital solution
HMRC has considerably reduced its reliance on cheques in the past couple of years, with cheque volumes dropping from around 4.1 million in 2023-24 to 1.74 million in 2024-25. However, one in 10 cheques have still gone uncashed.
The tax authority is transitioning to a new system whereby cheques are only sent if requested. Some 20% of taxpayers remain on the old system, but HMRC aims to complete the switch by April 2027.
The simplest way for taxpayers to take action if they receive cheques is to ensure HMRC holds the correct bank details. This can be done through the personal tax account on the Government Gateway. PAYE taxpayers who have not filed a Self Assessment tax return can update their account number and sort code in the tax refund section of their personal tax account. HMRC can then make refunds directly rather than defaulting to a cheque.
Are you owed a tax rebate?
Taxpayers that have changed jobs, worked under an incorrect tax code, or held more than one employment in a year are the most likely to have overpaid their tax. Overpayments are common but not always flagged, with HMRC usually sending P800 letters in the months following the year end (5 April).
The quickest way to check if a refund is due is by checking your personal tax account. Alternatively, contact a reputable accountant for assistance with tax issues, from rebates and Self Assessments to tax planning and Inheritance Tax.
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