Overpaid Tax: Payroll Refunds and HMRC Claims

These are reasons to check your tax, not proof that you are owed a refund:

• Monthly tax much higher than expected: compare earnings, your code and earlier deductions. A bonus, taxable benefit or cumulative correction can legitimately increase one month's tax.
• W1, M1, or X suffix on the tax code: these indicate a non-cumulative basis that ignores previous months' history. If you have been on this code for several months without correction, you may have overpaid.
• BR on your main job: BR taxes all income from that job at the basic rate. Whether it is appropriate depends on your other income and how HMRC has allocated your allowance.
• Left a job mid-year: unused allowance may create a refund, depending on your full-year income, benefits and any later employment.
• Tax code with a lower number than 1257: this can correctly account for company benefits, other income or tax owed. Check HMRC's explanation of the adjustment.

The payslip checker compares one period with an estimate. It cannot calculate a confirmed refund without your complete tax-year history.

The P800 is HMRC's annual reconciliation notice. After every tax year ends on 5 April, HMRC compares the tax collected via PAYE against the tax actually due based on all the income and deductions they know about. If you paid too much, HMRC issues a P800 tax calculation informing you of the overpayment and how to claim it back.

Key facts about the P800 process:

• Timing: HMRC sends tax calculation letters between June and March of the following tax year. For 2026–27, that means June 2027 to March 2028.
• How you receive it: by post to your last known address, or as a notification in your HMRC Personal Tax Account online.
• Claiming online: if your P800 says you can claim online, log in to tax.service.gov.uk and the refund is paid into your bank account within 5 working days.
• If your P800 says a cheque will be sent: you do not need to make a claim; HMRC says it should arrive within 14 days of the letter. If you instead request a cheque after being invited to claim, allow up to 6 weeks. Follow the instructions on your own letter.
• No letter yet: use HMRC's refund checker to find the claim route for your circumstances.

If you are registered for Self Assessment, HMRC handles an overpayment through your Self Assessment account rather than a P800. Check whether you need to file a return based on your circumstances.

Your Self Assessment return includes a section for PAYE income. You enter your gross pay and the tax deducted at source (both shown on your P60 or final payslip). The calculation then works out whether your PAYE payments have been sufficient, insufficient, or excessive for the year as a whole.

• A credit may be used against tax due in the next 45 days instead of being refunded.
• A refund marked pending has been created but still needs approval and payment.
• Use HMRC's Self Assessment refund guidance to check your claim and expected response time.

Check the employment pay and tax figures against the relevant P60 or P45 records before submitting your return.

The fastest and simplest resolution to a tax overpayment is for your employer's payroll to correct it within the same tax year. This happens automatically when HMRC issues your employer an updated tax code with the correct cumulative basis.

Here is how it works in practice:

• HMRC issues a new code, for example changing 1257L M1 to 1257L (cumulative) or correcting a BR code to the right number.
• The payroll software applies the new code to your next pay run and recalculates your total tax due for the year to date.
• If the recalculation shows you have paid too much so far, payroll can reduce the current deduction or show a tax refund as a negative deduction.
• Ask payroll which pay run will include the correction and check the amount on that payslip.

This is the ideal outcome because it is fast, automatic, and requires no paperwork on your part. The only thing you need to do is ensure HMRC has the right information to issue the corrected code in the first place — which means providing a P45 or completing a starter declaration promptly when you join a new employer.

If payroll receives the correct code mid-month after the payroll cut-off date, the correction will appear on the next month's payslip rather than the current one.

The normal limit for overpayment relief claims is 4 years from the end of the relevant tax year. Check the rules for your claim route and do not wait until the deadline.

Tax year of overpayment	Claim deadline
2022–23	5 April 2027
2023–24	5 April 2028
2024–25	5 April 2029
2025–26	5 April 2030
2026–27	5 April 2031

Keep your P60s, P45s and payslips to support a claim. If the normal deadline has passed or you are unsure which process applies, ask HMRC about your specific circumstances.

Start at the official Personal Tax Account sign-in page. Follow its instructions to sign in or create an account and verify your identity.

Once logged in, the Personal Tax Account shows you:

• The tax code currently held for each active employment or pension.
• Your estimated tax position for the current year — whether you are on track to pay the right amount, are likely to owe tax, or may be due a refund.
• P800 notices if any have been issued for previous years.
• A claim button for repayments where the overpayment has been confirmed.
• Your National Insurance contribution record.

If the account and payslip show different codes, ask payroll which notice and pay period they used. Check your employment, income and benefit details with HMRC and update anything wrong or missing.

Not all PAYE discrepancies result in a refund. If HMRC's reconciliation shows you paid less tax than was due — perhaps because a benefit in kind was under-reported, or because you had income from multiple sources — you may receive a demand rather than a refund.

HMRC has two main mechanisms for collecting PAYE underpayments:

• Coding out: HMRC can usually collect an underpayment of less than £3,000 through your tax code if you pay tax through an employer or pension provider and have enough income above your allowance. Collection is usually spread over 12 months of the following tax year.
• Simple Assessment: you may receive a bill where tax cannot be collected through your code. Follow the payment deadline on the letter; letters issued later in the year can have a different deadline.

If a P800 uses incorrect figures, contact HMRC with the details. If information on a Simple Assessment is wrong, contact HMRC within 60 days. A query does not automatically change the payment deadline.

This example illustrates how an overpayment can build up when you leave employment mid-year.

Scenario: Anna earns £40,000 per year and leaves her job on 5 October 2026 — the end of month 6 of the 2026–27 tax year. Her employer has been using 1257L throughout. This example assumes England, Wales or Northern Ireland, no pension deductions, and no other taxable income or benefits for the year.

Item	Amount
Annual salary	£40,000
Earnings for 6 months	£20,000
Personal allowance for full year	£12,570
Taxable income if whole year worked	£27,430
Tax due on £27,430 (all basic rate)	£5,486
Tax actually collected by October (cumulative)	~£2,743
Taxable income actually earned	£20,000 − £12,570 = £7,430
Tax actually due on £7,430	£7,430 × 20% = £1,486
Overpayment	£2,743 − £1,486 = ~£1,257

On these assumptions, Anna's final full-year tax is roughly £1,257 below the amount collected when she left. Payroll had then applied only six months of her allowance. She should use HMRC's refund checker to find the appropriate route; someone who has stopped working may qualify to claim during the tax year.