HRMC breaks silence over paying £689 refunds to people 'soon'

HMRC has issued an update for people claiming refunds as a record £198 MILLION is overpaid. According to a survey by Canada Life, the average payout to anyone who overpaid tax was £689, and HMRC is now issuing an update over the refunds.

HMRC says "refunds of overpaid tax will be paid as soon as the return has been processed". Myrtle Lloyd, HMRC’s director general for customer services, said: "Filing your self-assessment early means people can spend more time growing their business and doing the things they love, rather than worrying about their tax return."

John Chew, a specialist in pension, tax and estate planning at Canada Life, said people are still being "caught out" and warned: "There must be a better way of managing these withdrawals, especially if people are targeting a specific reason to use the money and find themselves short due to emergency tax being applied."

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Chew said: "While we wait for the tax system to catch up with the freedoms, a good tip for people who are making a pension withdrawal for the first time is to request a small withdrawal of say £100. That will generate a tax code from HMRC which the pension provider will apply to any subsequent withdrawals."

He continued: "That will result in the tax being taken at source being far more accurate in many more cases, not only reducing the burden of paperwork but equally importantly the customer receiving a more accurate withdrawal in the first place.

"It's also worth noting that any change in tax position during the course of the year, resulting in a new tax code being issued by HMRC, should also be shared with your pension provider as a matter of course. This will help identify any differences in the tax being applied and allow for earlier intervention if required."