If you are employed or getting a pension, HMRC will check that you have paid the right amount of tax for the tax year. If you have under or overpaid, they will issue a P800 tax calculation. The calculation is broken down into various sections to show your income, deductions, tax allowances, and the tax under or overpayment. P800s are typically only sent to taxpayers who are not in Self Assessment (i.e. to those that do not have to complete a tax return).
There have been a number of issues with P800s in the past, including:
- Duplicated employment or pension income.
- Other income (e.g. investment income) remaining as per the previous tax year when it is subject to variation.
- The Marriage Allowance not being accounted for.
This year, there is a specific issue with bank/building society interest. From 5 April 2016, all banks/building societies have been required to pay interest gross (i.e. without deducting tax).
However, some 2016/17 P800s have been issued which do not reflect this change. The interest is shown as having been received net of tax, with some taxpayers receiving an incorrect tax refund as a result.
If you have been issued with a P800, be sure to check that it is correct; otherwise you may pay more tax than you should or mistakenly accept a refund that is not due. If you need any further advice on P800s, please contact us.