How Long Does a Tax Repayment Take Once Issued?

There are essentially two major ways to get a tax refund from HMRC being too much tax paid through PAYE or you are due a refund on completion of a Self-Assessment tax return.

If you have paid too much tax to HMRC through PAYE income i.e. through a payroll, HMRC will send you a tax calculation letter (P800) or a simple assessment letter, explaining how you can get a tax repayment refund. Once the tax refund is approved, the HMRC will process a repayment to you.

You may have submitted a Self-Assessment tax return and are due a refund from HMRC.

If this applies to you, and you’re wondering how long a tax repayment takes to get to your bank account once issued, here’s all you need to know.

In most cases, a tax repayment will not take long to be paid to you once issued. After being approved, the money for your tax repayment will be sent via BACS within 5 working days. As soon as your bank has processed the payment, you will then have it. 

However, if you are being paid by cheque, this could take longer to reach you, with the tax repayment possibly taking up to 6 weeks to arrive from the date on the tax calculation letter.

How long does it take HMRC to process tax repayments?

The quicker your tax repayment is processed, the quicker your refund will arrive once issued. The time it takes HMRC to process a tax repayment claim to then issue a refund can vary depending on several factors. These can include the method of application, whether any security checks are necessary, and the type of tax refund being claimed.

Tax refunds in the UK can take up to 12 weeks to be processed, with a further 5 days to 6 weeks to then receive the tax repayment once issued to receive the funds. 

However, it is worth noting that some refunds may be held up for security checks, which can cause delays. If you have not received your tax refund after 12 weeks, you should contact HMRC directly to inquire about the status of the claim.

Understanding UK tax repayments

If you overpay on tax in the UK, you are entitled to a tax repayment. The claim process from start to finish can take some time, but the timeline is relatively simple.

According to the Handpicked Accountants website, tax refunds in the UK can take up to 12 weeks to be processed by HMRC. However, this time it takes can vary depending on the complexity of the tax return and the accuracy of the information provided.

Once the tax repayment has been processed and issued, it will typically take 5 days to receive the money, or up to 6 weeks in the worst case scenario. This timeline also depends on the payment method used by you as the taxpayer.

HMRC may hold back some tax repayments for security checks, which can lead to delays in you receiving the funds. This happens when HMRC need to check there is no fraudulent activity. In 2021, AccountingWeb reported on cutbacks in staffing levels at HMRC, meaning there were fewer repayment security officers, resulting in occasional longer waits for taxpayers waiting for refunds. This should now be resolved but may still affect how long it takes your tax repayment to arrive once issued. 

The tax repayment process

Self-Assessment tax refund

Once you have filed your tax return, you may be entitled to a tax refund if you have overpaid. If the tax return is deemed to be correct, and you have paid too much, HMRC will issue a notice of repayment. This detail the value of the refund and the date that the tax repayment will be issued.

After your submission has been made to HMRC you will need to login using your Government Gateway user ID and password to make the reclaim. This does not happen automatically you need to request the self-assessment tax refund.

To claim a refund go to ‘Request a repayment’ from the left hand menu within your HMRC online account and enter the details of the repayment. Allow 4 weeks for your refund to be sent to your chosen bank account.

You may not get a refund if you have tax due in the next 35 days such as a payment on account becoming due. Instead, the money will be deducted from the tax you owe.

You can choose to have your tax repayment issued via a direct bank transfer (BACS) or by cheque. The BACS method will not take as long for your tax repayment to arrive once issued and is more secure than a cheque.

If you have submitted a paper return HMRC will pay any refund directly into your bank account provided you include the bank account details on your tax return.

P800 tax refund

If your tax calculation letter (P800) letter says you can claim online you can do so using your Government Gateway user ID and password and request the repayment. This way you will get paid faster. You’ll be sent the money within 5 working days – it’ll be in you UK account once you bank has processed the payment.

If you do not reclaim your refund online within 21 days. HM Revenue and Customs will send you a cheque. You’ll get this within 6 weeks of the date on the tax calculation letter.

If your letter states that HMRC will send you a cheque you do not need to make a claim as outlined above and can expect to receive the cheque within 14 days of the letter date.

In summary, the process for receiving a tax repayment in the UK begins with the HMRC reviewing the tax return and issuing a notice of repayment. The time it takes to receive the repayment can vary, but you can expect to receive it within 5 to 10 working days of the date specified on the notice once issued. 

Factors affecting how your tax repayment takes

• Filing method: If you file your tax return online, you can expect the refund to be issued within five weeks of submitting your tax return. If you file your returns by paper, you could be looking at up to 12 weeks to receive a tax refund.
• Tax debt: If you have an outstanding tax debt, HMRC may use the tax repayment to offset the debt. 
• Payment method: Taxpayers who choose to receive their tax refunds via direct deposit can receive their refunds faster than those who choose to receive a cheque in the mail.
• Seasonal demand: During peak tax season, HMRC may experience a high volume of tax returns and tax repayments, which can cause delays in processing tax refunds.