As part of its continued efforts to help and support PAYE taxpayers get things right, HMRC has started the annual End of Year Reconciliation process that will continue until October 2015. The process compares the tax that is paid with the tax that is due as per information on HMRC’s records.
If you think you’ve not paid the right amount of tax for the 2014-15 tax year, you can expect to receive a P800 tax calculation by the end of September through post. This will show whether you need to pay more tax or get a tax refund (rebate).
Note: Tax payers that are registered for self-assessment won’t receive a P800 – their bills will instead be adjusted automatically.
Why have I received a P800?
To ensure you have paid the correct amount of tax HMRC collates and reviews all your income and PAYE information it receives from employers, pension providers and banks. Mostly, the calculations are correct and you won’t receive a P800. However, sometimes HMRC finds some discrepancies in the amount of tax paid and will send out a P800 tax calculation letter if it deems you’ve overpaid or underpaid tax.
There are various reasons why you could receive such a letter. Some of these are:
- change in jobs within the same month
- signing-up for pension scheme at work
- receiving Employment Support Allowance or Job Seekers Allowance
- A £300 (or 5% of the tax you owe, whichever is greater) fine if you still haven’t filed after another 90 days
- Another £300 (or 5% of the tax you owe, whichever is greater) if you haven’t filed within a year
- More penalties - including up to 100% of the tax owed, if HMRC believed you are deliberately delaying
What should look for on the P800?
Firstly, check if the details on the P800 are correct. You can:
- Compare HMRC’s figures with you own records , for example your P60, P11d, bank statements or letters from the Department for Work and Pensions (DWP)
What if you’ve underpaid?
If you’ve paid less, the underpayment will be collected automatically through the 2016/17 tax code. As this happens automatically you don’t need to do anything. In case you are out of work HMRC won’t be able to collect the money you owe through your tax code. In such situations HMRC will write to advise what options are available.
What if you’ve overpaid?
If you are paying too much you will receive a cheque for the overpayment within 14 days of submitting the P800 tax calculation.
