As the new 2025-26 tax year begins, HMRC is sending out its trademark brown envelopes to taxpayers across the UK, and for many, they could contain some welcome news. According to a report from the Express, these letters could include an average tax refund of £689, the result of overpayments made during the last financial year. However, not everyone will be so lucky—some could find they owe up to £783 due to underpaid tax.
Why You’re Receiving the Brown Envelope
The envelopes follow the closing of the 2024-25 tax year, as HMRC reconciles all income data based on final P60s, salaries, pensions, and savings interest. Taxpayers who overpaid—often due to reasons such as starting a new job mid-year or being assigned the wrong tax code—may be due an automatic refund. A survey by Canada Life found that 31% of adults had been assigned the wrong tax code, leading to widespread overpayments averaging £689.
On the flip side, if HMRC finds that you underpaid tax, the same letter could inform you that you owe money—on average, £783—and must make arrangements to pay.
What to Do When You Receive It
Taxpayers are encouraged to carefully cross-check the figures in the brown envelope with their P60 to ensure there are no discrepancies. If the tax code or figures look unfamiliar, it’s essential to clarify with HMRC directly—especially as tax-related scams are common at this time of year. Experts recommend calling HMRC on 0300 200 3300, rather than using any contact details included in the letter, to avoid fraud.
If you do owe money and cannot pay it immediately, HMRC has stated it can arrange repayment plans. According to LV’s Gillian Wrigley, “If you don’t have the money to hand, explain that and they should devise a doable payment plan… HMRC is staffed by humans.”
