HMRC Refund Delays: What UK Businesses Need to Know

If you’re a UK business owner awaiting a tax refund from HMRC, you’re not alone. In recent months, many have experienced significant delays, with some waiting over four months for repayments that previously took just weeks. These delays are particularly affecting refunds related to the Pay As You Earn (PAYE) system and the Construction Industry Scheme (CIS).

What’s Causing the Delays?

Processing Backlogs: HMRC has acknowledged a substantial backlog in processing refund claims, especially those submitted in late 2024 and early 2025. For instance, some claims submitted in March 2025 are not expected to be processed until August 2025.

System Changes and Service Reductions: The closure of HMRC’s free online filing service has added complexity for small businesses, requiring them to adopt third-party software solutions. This transition has contributed to processing delays.

Security Checks: HMRC conducts security checks to prevent fraud, which can delay refunds by several weeks. These checks are applied randomly and can significantly extend processing times.

Impact on UK Businesses

Delayed tax refunds can strain cash flow, particularly for small businesses and charities relying on timely repayments. The delays in PAYE and CIS refunds are especially challenging, as these funds are often earmarked for operational expenses.

Navigating the Delays: Practical Steps

Regularly Check Refund Status: Use HMRC’s online tools to monitor the status of your refund claims. Staying informed can help you plan accordingly.

Maintain Open Communication: Keep in touch with HMRC to stay updated on processing times and any additional information they may require. This proactive approach can help expedite your claim.

Adjust Financial Planning: Anticipate potential delays by adjusting your cash flow projections. This foresight can help mitigate the impact of delayed refunds on your operations.

Looking Ahead: 2025/26 Tax Year Considerations

As we move into the 2025/26 tax year, it’s crucial to stay informed about HMRC’s processing times and any changes to their systems. Being proactive in your tax planning and maintaining regular communication with HMRC can help navigate potential delays.

HMRC’s refund delays are a significant concern for UK businesses, impacting cash flow and financial planning. By understanding the causes and taking proactive steps, businesses can better navigate these challenges. If you’re experiencing issues with tax refunds, don’t hesitate to contact Helpbox for guidance tailored to your situation.