Tax overpayments and underpayments

Our experts tell you what you need to do if you have paid the wrong amount of tax

Our experts at DSR Tax Claims know how hard it is to find good, quality information about HMRC’s tax regulations that is easy to understand, and that’s why we have created these handy guides to tell you everything you need to know. Our aim is to make life easier for our clients and that is why we want to share our expertise with you. You can also call our friendly team on 0330 122 9972 – we’re the tax experts you can trust. Or you can check out our online calculator to see if you could be due a refund.

How is your tax calculated?

HMRC checks you are paying the right amount of tax throughout the tax year, if you receive an income from an employer or a pension. If you’re not paying the right amount of tax in the current tax year, HMRC can change your tax code to adjust how much tax you pay. They might do this if you get a pay rise, for example, or receive a taxable benefit from your employer.

If you haven’t paid the right amount of tax at the end of the tax year, HMRC will send you a tax calculation. This might be a P800 or a Simple Assessment letter. This will tell you if you have paid too much or too little over the tax year. If you have paid too much you can claim a tax refund. if you haven’t paid enough, you will have to make additional payments to HMRC to cover what you owe.

You might receive a P800 for any of the following reasons:

  • You have finished one job and then started another and were paid by both in the same month
  • You received Employment and Support Allowance or Jobseeker’s Allowance
  • You started to receive your pension while still working

If you are registered for Self Assessment, you won’t receive a P800. Your tax bill will be adjusted automatically through the Self Assessment system.

P800s are sent out after the end of the tax year. If you are going to get one, you should have received it by the end of November.

You might get a Simple Assessment letter instead of a P800 if you owe tax that can’t automatically be deducted from your wages, if you owe more than £3,000 or you have to pay tax on your State Pension. You can pay your Simple Assessment tax bill online.

Why should you check your tax calculation?

If you receive a P800, you should check it against your own income records, such as your P60, bank statements, or letters from the Department of Work and Pensions. The P800 should show all the income you should have paid tax on, so you need to make sure that it is in line with your own records. You can also use the HMRC tax checker to see how much tax you should have paid.

If you think HMRC has got it wrong when calculating your tax, you need to let them know. You also need to inform HMRC if they haven’t acted on information you have given to them regarding your income.

What if your P800 says you are due a tax refund?

This is the best-case scenario, isn’t it? If your P800 tax calculations says you are owed a refund, it will give you information on how to claim your refund.

Claiming online

If your P800 says you can claim your tax refund online, you will receive your money within 5 working days of claiming. It will be paid into your UK bank account and will be available as soon as your bank has processed the payment. If you don’t claim online within 45 days, HMRC will send your refund as a cheque within 60 days of the date on your P800. You can contact HMRC if you are unable to claim your refund online.

Receiving your refund by cheque

Your P800 will tell you if you will receive your refund by cheque. You don’t need to do anything – the cheque will be sent automatically. You should receive it within 14 days of the date on your P800. If you are owed a refund for more than one tax year, you will receive all your refunds as one single  cheque for the whole amount.

If you don’t receive a P800

You need to tell HMRC that you think you are owed a tax refund. If they agree, they will send you a cheque within 5 weeks.

What if your P800 says you owe tax?

If your P800 says that you have underpaid, HMRC will usually collect this underpaid tax in instalments over the course of the following tax year. They will collect it automatically if you pay Income Tax through an employer or pension provider. You would need to earn enough income over your Personal Allowance to collect it and the amount of tax you owe needs to be less than £3,000.

If HMRC can’t collect the underpaid tax this way, they will write to you to tell you what will happen next.

Your P800 will also inform you if there are other ways you can pay your tax bill. You might be able to pay online or by post, if you have a paying-in slip with your P800.

How can DSR Tax Claims help?

We aim to make life as simple as possible for our clients and that includes giving you the information you need to make your taxes (and your life) simpler and less stressful.  Our team of experts at DSR Tax Claims are always on hand to help our clients and our excellent standing with HMRC means that we can make sure you don’t fall foul of their regulations, while claiming your maximum tax rebate. We can even take care of all that paperwork and deal with HMRC on your behalf too. Call our friendly team on 0330 122 9972 – we’re the tax experts you can trust.

This page was last updated on 06/11/2018.

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