HMRC tax calculations process

Around 5.5 million people will receive tax calculations, P800s, between now and October. Will you be sent a letter and what should you do if you receive one?

Are you on the Taxman’s P800 list?
HMRC recently said it has started its review of 2012/13 tax liabilities and should be finished by October. This affects only those who have income taxed under PAYE and who have not been asked by HMRC to complete a self-assessment form for 2012/13. If you don’t fall into either of these categories, you don’t need to worry.

Computer says!
While the review is largely done by computer, much of the information it uses has been manually inputed, so it’s a dead cert that tens, if not hundreds, of thousands of calculations will be wrong. What should you look out for?

Assume nothing.
You would assume HMRC would get the basics right, but last year we saw cases where the earnings figure for one individual was included on someone else’s P800. So check these against your P60s P45s and, if applicable, P11Ds.

Watch out for estimates.
Where your P800 shows non-PAYE income, for example, bank interest or other investment income, the figures will definitely be estimated as HMRC doesn’t have direct access to these details and relies on you to provide them. Compare these figures to your own records and notify HMRC of any errors.

Under or overpaid.
HMRC reckons that of the 5.5 million P800s that will be issued, around three million will show more tax due, while the remainder will show refunds. If the P800 shows you owe tax of £3,000 or less, and you have continuing PAYE income, HMRC will aim to collect it by adjusting your code for 2014/15 so you’ll pay the extra tax through your earnings for that year. In other circumstances you’ll be sent a bill later this year. Where the P800 shows you’ve overpaid tax, you’ll receive a cheque, usually within 14 days.

P800s will be sent only to those with PAYE income who aren’t in self-assessment. Check all the figures and pay special attention to non-PAYE income as this will be estimated. Notify HMRC of any errors immediately.

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