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What Do I Need to Know About HMRC’s P800 Calculation?

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If you’re reading this article, we already know what happened: you spotted the HMRC stamp in the corner while flicking through your mail today. You received a P800.

A P800 can either brighten or dampen your day, depending on whether you owe more tax than you initially thought or if you are entitled to a refund. Regardless of your situation, you might have other questions, with one of the most pressing ones being, ‘How did HMRC calculate this P800?’

So, let’s review the who, what, when, where, and why of the P800 Form and attempt to clarify how the UK’s leading tax authority can occasionally provide an inaccurate tax assessment.

What is a P800 Form?

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HMRC conducts tax calculations to ensure that we all pay the correct amount of tax. If they discover that you have underpaid or overpaid, they will send you a letter containing a P800 Form, which will specify the amount you owe or are due to be refunded, along with payment instructions.

P800 Forms are typically dispatched at the start of the tax year. So, if you qualify to receive one, it will likely reach your doorstep in mid to late April. However, it’s important to emphasize that this is not a strict rule, and you may receive a P800 at any time during the year.

The form will include:

  • Your total income for the tax year.
  • The amount of tax you paid across the tax year.
  • Any tax-free personal allowance.
  • Any tax-deductible expenses you may have incurred.

Who might receive a P800 Form?

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HMRC typically performs P800 calculations only for individuals who earn their income through PAYE (Pay As You Earn) and are exempt from filing a yearly Self Assessment tax return.

This means that P800 Forms are generally not issued to self-employed individuals, as their tax payments are determined through the Self Assessment process. Any errors in your Self Assessment will be detected during the processing of your tax return, and HMRC will contact you to resolve the issue.

How is a P800 tax calculation made?

Essentially, HMRC compares the amount of tax deducted from your wages or pension payments with the amount that was actually due across the tax year.

If HMRC spots a discrepancy, they issue the tax calculation via a P800 Form and post it to you.

Can you challenge a P800 tax calculation?

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You certainly can – in fact, we always recommend double-checking HMRC’s maths before accepting the verdict of the P800 Form. They may be professional, but even they can make mistakes sometimes.

The first thing to note if you’re preparing to challenge a P800 calculation is that P800s are not a formal demand for payment. The P800 is actually designed to be the first touchpoint – the equivalent of asking your partner ‘Did you remember to put the bins out?’, whether you genuinely don’t know the answer or you’re just being polite about their laziness.

If you have doubts about the accuracy of your P800, or want more information, you can contact HMRC for a detailed explanation.

In case that you ignore your P800, though, the next letter you get from them will be far more akin to ‘Put the bins out immediately’, so it’s better to handle their request as soon as possible.

If you believe that any of the figures that appear on your P800 are inaccurate (i.e., your total income for the year, for example), you can challenge HMRC’s calculation with any documentation you have that proves that they’re working with the wrong numbers.

How to settle any underpaid tax that appears on my P800

If you find yourself in the unfortunate situation of receiving a P800 that indicates an underpayment of tax, the accompanying letter from HMRC will detail the necessary actions you must take to settle the outstanding tax.

Typically, you can make a straightforward lump-sum payment online. Alternatively, HMRC might choose to modify your PAYE tax code for the upcoming tax year and recover the unpaid tax through deductions from your monthly wages, similar to their approach for other tax liabilities.

Once the outstanding amount is settled, your tax code will return to its regular status.

How to claim a refund from a P800

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If you’ve received the delightful news that the taxman actually owes you money for a change, there are still a few steps you must take to claim your refund. (Don’t expect them to make it easy, though!)

If your P800 Form indicates that you are entitled to a refund, you must initiate a tax rebate claim with HMRC. To do this, you will require your Government Gateway user ID and password, which you may need to create if you haven’t previously logged into the gov.uk website.

To create an account, you will need your National Insurance number, your postal code, and additional proof of identification, which may include:

  • A valid UK passport or driving license.
  • A payslip from the last three months, or your most recent P60.
  • Information held on your credit record if you have one.
  • Any details of a tax credit claim, if you’ve made one in the past.

If your claim succeeds (which it should, since you’re quoting from an HMRC P800 calculation), you should anticipate that your refund will appear in your bank account within five working days after the payment undergoes processing.

How can Count help me?

HMRC typically sends out P800 Forms to individuals who earn their income through PAYE, which primarily includes full-time employees, rather than the self-employed community. If you are currently a client of Count or if you are self-employed, you are unlikely to require assistance with P800 tax calculations.

The self-employed community fulfills their tax obligations through the annual Self Assessment tax return, a process in which Count can provide you with assistance!

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