Thousands of people in Britain are missing out on tax rebate payments after failing to cash cheques sent by HMRC.
According to a Freedom of Information request obtained by The i Paper, HMRC issued
1,746,720 cheques last year. However, 178,180 of these cheques were never cashed.
The total value of the unclaimed cheques was £144 million, meaning affected taxpayers missed out on an average of around £800 each.
Millions of Britons overpay income tax every year. HMRC usually contacts them through a letter explaining how they can request a rebate.
If no response is received within 21 days, HMRC sends a cheque to the taxpayer’s registered address. Overpayments can happen for several reasons, including:
- Changing jobs during the tax year
- Having multiple sources of income
- Being placed on the wrong tax code by mistake
HMRC Trying to Reduce Paper Cheques
HMRC has been working for several years to cut down on the number of paper cheques it issues. The goal is to lower costs, speed up refunds, and improve efficiency in its operations.
Paper cheques are also seen as high-risk because they can be lost or stolen in transit. Missing cheques create extra administrative problems for both taxpayers and HMRC.
In 2024, HMRC introduced a new system aimed at reducing cheque use. Under this process, the department now tries to contact taxpayers through alternative methods unless a cheque is specifically requested.
Despite this progress, HMRC says around 20% of cases have not yet moved to the new system. The department plans to complete the transition by the start of the next tax year in April 2027.
Calls for Faster Digital Reform
Industry experts have urged HMRC to speed up the move toward a fully digital process. They believe this would reduce errors, ensure refunds reach taxpayers more quickly, and improve public trust in the department.
