The return envelope is designed to fit the R40 form which is not standard A4 width. The R40 form is 20 mm narrower and the envelope is 5 mm narrower than A4.
The R40 is currently being redesigned and from the April 2007 issue, HMRC intend to change both the issue and return envelopes. The issue size will be A4 to accommodate enclosures that are sent out with the form. The return envelope will be C5. This will reduce the amount of postage required.