Millions of employed people in the UK overpay tax every year without knowing it. In many cases the overpayment goes unclaimed because HMRC does not automatically send a refund notification, and most people assume their employer has got the tax right. It is worth taking five minutes to check.
This guide explains why PAYE overpayments happen, how to check whether you are owed money, and how to claim it back.
Quick Answer
PAYE overpayments are common and often go unclaimed. The most frequent causes are incorrect tax codes, changing jobs mid-year, taking time off work, and failing to claim reliefs like pension contributions or Gift Aid. You can check your tax position via your HMRC personal tax account and claim refunds for up to four years.
Why Do PAYE Overpayments Happen?
Incorrect Tax Code
Your tax code tells your employer how much tax to deduct from each payslip. If HMRC gives you the wrong code, your employer will deduct too much. Common causes of wrong tax codes include:
- HMRC having outdated information about your income
- A previous employer failing to submit a P45
- Incorrectly recorded taxable benefits
- Emergency tax codes applied when starting a new job
An emergency code (often 1257L W1 or M1, or BR) means your employer taxes all your income without accounting for your personal allowance or previous earnings in the year. These often resolve automatically, but not always.
Changing Jobs or Starting Work Mid-Year
The personal allowance (£12,570) is spread evenly across the tax year. If you only work for part of the year (starting a new job in October, for example), you will receive less income than a full year but your allowance remains the same. This means a portion of your allowance goes unused, and you will typically have overpaid tax.
Taking Unpaid Leave or a Career Break
If you take unpaid leave, go on maternity or paternity leave on reduced pay, or stop working for a period, the same logic applies. You may have paid tax based on a full year projection but only earned income for part of it.
Unclaimed Reliefs and Allowances
If you make personal pension contributions outside your workplace scheme, donate to charity via Gift Aid, or incur allowable employment expenses such as professional subscriptions, uniforms, or tools, these may reduce your tax bill but only if you claim them. If you have not told HMRC about these, you may be paying more tax than you should.
Leaving the UK
If you leave the UK part-way through a tax year, you may be entitled to a refund of some or all of the tax deducted. This is handled through a different process involving a P85 form.
How to Check Your Tax Position
The simplest way is to log into your HMRC personal tax account at gov.uk. Once logged in, you can:
- See your current tax code and check whether it looks correct
- View your tax calculation for previous years
- Check whether HMRC shows any estimated repayment due
- Update any information that might be causing your code to be wrong
HMRC does sometimes send a P800 letter at the end of the tax year telling you that you have overpaid or underpaid. But not everyone gets one, and the calculation is based only on information HMRC already holds. If you have unclaimed reliefs, a P800 will not capture those.
How to Claim a Refund
For most employed people, if HMRC calculates that you have overpaid, they will either:
- Pay it directly to your bank account (if you have set up a personal tax account)
- Adjust your tax code so you pay less in future
- Send a cheque
If you believe you have overpaid but have not received a P800 or refund, you can claim by:
- Logging into your personal tax account and requesting a repayment
- Calling HMRC
- Filing a Self Assessment return (which is the correct route if you have unclaimed reliefs or more complex affairs)
You can claim for up to four tax years. After that, the right to claim a refund is lost.
FAQs
How do I know if my tax code is correct? Your tax code appears on your payslip and on letters from HMRC. The standard code for most people is 1257L, which reflects the basic personal allowance of £12,570. If your code is different, there will usually be a reason. You can check what it means via the HMRC website or call HMRC to ask.
I changed jobs twice last year. Am I likely to have overpaid? Quite possibly. Each time you change jobs without a P45, there is a risk of being put on an emergency code temporarily. Even if that was corrected, gaps between jobs can leave you with unused allowance. It is worth checking.
How far back can I claim a tax refund? Four tax years. So in the 2025/26 tax year, you can claim back to 2021/22. After 5 April 2026, the 2021/22 year closes permanently.
HMRC says I underpaid tax. Is that right? Sometimes HMRC makes errors. If you receive an underpayment notice and you believe it is wrong, do not simply pay it. Check the calculation carefully. If there is a mistake, you can challenge it. A tax specialist can review the figures and respond to HMRC on your behalf.
My employer has been deducting extra pension contributions. Does this affect my tax? Yes. Pension contributions through a salary sacrifice scheme reduce your taxable pay, so you should automatically pay less tax. If you make contributions to a personal pension outside your workplace scheme, you need to tell HMRC so they can adjust your code or you can claim relief via Self Assessment.
Find Out If You Are Owed a Refund
Our principal tax adviser is an ACCA and ATT qualified tax specialist and HMRC Registered Agent with over 25 years of personal tax experience helping employed individuals, landlords and sole traders across Kent. Kent Tax Specialists covers Gravesend, Dartford, Maidstone, Medway, Canterbury, Sevenoaks, Tonbridge and the wider Kent area. Get in touch today to find out what you might be owed.
Also see: Personal Tax Advice in Gravesend | Personal Tax Advice in Dartford
