HM Revenue and Customs (HMRC) is sending out tax rebate cheques worth around £800 each to thousands of UK households — yet nearly 178,000 of these cheques go unclaimed every year. According to recent figures disclosed on April 12, HMRC issued approximately 1.75 million cheques last year to taxpayers who had overpaid, but 178,180 of these were never cashed, leaving a total of £144 million uncollected.
Experts warn that relying on cheques for refunds is outdated and problematic. Robert Salter, partner at Blick Rothenberg, noted, “It is concerning that HMRC continues to use cheques to settle so many tax refunds.” Shaun Moore, tax and financial planning expert at Quilter, explained that the tax system’s struggle to keep pace with the digital economy contributes to these unclaimed payments.
“Overpayments often result from job changes, incorrect tax codes, or multiple income sources,” Moore said. “While these errors may persist, the way refunds are processed needs to improve. Paper cheques carry a higher risk of delay or being overlooked.”
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HMRC has been reducing cheque usage, increasingly favoring faster and more secure bank transfers as the default method. An HMRC spokesperson confirmed this: “Most PAYE repayments now arrive by bank transfer, which is the quickest and safest option. Customers who opt for cheques must take responsibility for cashing them.”
The ongoing reliance on cheques creates unnecessary friction in ensuring taxpayers receive due refunds promptly, suggesting a stronger shift towards fully digital payments is needed to reduce unclaimed rebates.