Suppose you are an employee that receives an income through the Pay As You Earn (PAYE) system. In that case, your Income Tax payments, National Insurance contributions, and workplace pension contributions are automatically deducted from your taxable income on your payslip.
Most of the time, this works smoothly, and you pay the exact amount of tax you’re supposed to, depending on your tax code. However, sometimes HM Revenue & Customs (HMRC), the Department of Work and Pensions (DWP), or your employer can make some errors which can throw these calculations off, resulting in you paying more tax than you should.
This could be if you’ve started a new job and had an emergency tax code for some time, you’ve had more than one job at the same time without your tax code reflecting this, you did not work through the entire tax year, or a simple error in processing a P45. There are numerous reasons that you could end up overpaying tax for that year.
When this happens, you are owed money from HMRC. Typically, they will send you a P800 or a Simple Assessment letter notifying you of this error and arrange for a repayment to be made, but this isn’t always the case. Therefore in this article, we’ll explain how to check if you’re due a tax refund, what P800 and Simple Assessment letters are, what to do if you’ve overpaid tax and haven’t received a letter, and how to claim your tax refund. Let’s dive in.
If HMRC deems that you have paid too much tax and are due a tax rebate from them, they will send you a P800 letter or a Simple Assessment letter that will outline how much tax you are owed. HMRC does their calculations after the tax year has ended in April, but you won’t get the letter until much later. Usually, the P800 or Simple Assessment letter arrives between June to October, however, it can also be as late as November. If you have not received a letter by November or December, it means that HMRC has deemed you have paid the right amount of tax.
The letter can tell you how you can claim your tax repayment. Some will be able to claim online using the government’s website. This is the quickest way to get your money, and HMRC will issue you a bank transfer of the amount straight into your bank account within five days. If it isn’t claimed within 21 days, you will receive a cheque by post within six weeks of the date on your letter. If your letter states that you will receive your tax refund as a cheque, you will have to wait for up to 14 days as they prepare to send it via post.
However, receiving a P800 or Simple Assessment letter isn’t always good news – it can also mean that you have underpaid tax. In this case, HMRC will outline the steps you need to take to pay the tax back. Regardless of whether you have underpaid or overpaid tax, the letter you receive will clearly detail the procedure you need to take to claim tax or pax tax back. But, we’ve also outlined how to do so in this article further below.
For those who think they are owed tax refunds but have not received the P800 or Simple Assessment letter, the first step is to determine whether you have actually overpaid or not. You can do this by taking advantage of HMRC’s Income Tax checker. There are separate ones to check if you are owed money for the previous tax year (2021/22) or the current tax year (2022/23).
If you want to claim tax relief for the previous tax year (2021/22), you will need to sign in to your Personal Tax Account. You’ll need your Government Gateway user ID and password on hand as these will be required to log in. If you don’t have one yet, you can create one in a few minutes. There are a few other things you will need on hand as well. You will definitely need your National Insurance number and one other document. You can choose from either of the following items:
- Your valid UK passport
- A P60 from your employer for the previous tax year
- Any and all details of any Tax Credits payments you’ve made
- A payslip from the previous three months
Once your Government Gateway account has been created, and you have logged in, you can check your financial details to verify if your calculations and HMRC’s calculations match up. If there are some differences and irregularities, you can proceed with claiming an HMRC tax refund. We will explain how to do this a little further down the article.
If your financial situation has changed, or if you just want to check your estimated Income Tax you will pay for the current tax year (2022/23), you will be required to sign in to the Government Gateway using your login details. As with the steps above, if you don’t have one yet, you can easily create one in a few minutes. Once logged in, you will have the option to view and change some of your details. These can affect how much tax you’re paying in the current tax year.
You will have the ability to check Personal Allowance, check to see if your tax code has changed or not and if you have been assigned a wrong tax code, and inform HMRC of changes in your situation that will have an impact on your tax code., You will also be able to verify and amend the estimates of how much income you think you will earn in the tax year from your job(s), pensions, or savings interest and see the estimate of how much tax you’ll pay over the current tax year.
If you find that you have overpaid, or will overpay before the current tax year is over, you can change your details in your Personal Tax account.
If you have made the necessary checks to see if you have indeed paid more tax than you should have during the previous tax year, claiming tax rebates from HMRC is a straightforward process. For those that need tax rebates, you can claim a tax refund directly on the HMRC website. You can claim a tax refund for up to four years after the end of the tax year in which you overpaid, giving you plenty of time to get your affairs in order.
Alternatively, if you want to speak to someone directly, you can call the HRMC support helpline. Unfortunately, they are closed over the weekend, but from Monday to Friday, they are open between 8 am to 6 pm. If you are calling from inside the UK, simply dial 0300 200 3300. If you are calling from outside the UK, simply dial +44 135 535 9022. The helpline will be able to assist you with any and all questions related to Income Tax, your tax code, if you’ve paid too much or too little tax, and your P800 calculation.
If you decide to call instead of doing it on the HMRC website, it should be noted that you will have to pass some security checks first. These include your National Insurance number, your address, and other personal details. They will match this up with the details they have on file, so ensure they are correct in your Personal Tax Account before calling because if they’re different, you won’t pass the security check.
The first thing you want to ensure is that the repayment amount is correct. This is for a few reasons. The P800 calculation is just an estimate based on the data that they have. If their data is wrong, then their calculations will be wrong. That’s why it’s imperative to ensure their calculation is correct. You could be owed less than they’ve estimated, or you could be owed more, so always double-check the figure on your end.
Secondly, in the event that HMRC ends up overpaying you and you don’t tell them, you could be charged an extra penalty. They will do this if they think you did not inform them of this error intentionally. Of course, this penalty will be on top of having to pay back the overpaid amount. Therefore, if you see any errors in the P800 calculations, contact them immediately to amend it.
It would be wise to be aware that if HMRC owes you less than £10 in tax refunds, they will not repay it. This is because their systems are built to only detect and act on tax refunds above the £10 threshold. In such an event, you will have to submit a claim yourself.
If you’re in a situation where you haven’t paid enough tax and you owe HMRC money, your P800 or Simple Assessment letter will outline this. As with the letter, if you have overpaid, typically, you will receive the letter between June and October.
HMRC must inform you of this within 12 months of the end of the tax year. If they don’t, you may be able to request that they drop the extra tax demand, meaning you may not have to pay it. However, this is situational, and you may still have to pay even if it’s been over 12 months.
Regardless of how much you have to pay back, HMRC will usually collect over the next tax year. Ordinarily, HMRC will automatically collect the owed tax over the next year if you satisfy any of the following criteria:
- Owe less than £3,000
- Pay Income Tax through employment or a pension provider
- Earn more income than your Personal Allowance in order to cover the amount owed
If for whatever reason, this isn’t financially possible, you can opt to pay your outstanding tax bill online, or you can contact HMRC directly in order to arrange a repayment scheme that spans a few years, thus spacing the payments out.
Whether you receive a P800 letter or a Simple Assessment letter will depend entirely on the reason behind the over or underpayment. Typically, P800s are sent out if you satisfy one of the following criteria:
- You’ve changed employers but were paid by both during the same month
- You’ve recently been enrolled into a workplace pension scheme
- You receive either Jobseeker’s Allowance or Employment and Support Allowance.
On the other hand, a Simple Assessment is usually sent out if you satisfy one of the following criteria:
- More than £3,000 is owed to HMRC
- You do not earn enough above your Personal Allowance to cover this, meaning it cannot be taken out of your income
- You are required to pay tax on your State Pension
If you owe money, both letters will detail your taxable income, the amount of Income Tax you’ve paid, and how much is owed to HMRC. On the flip side, if you have overpaid and HMRC owes you money, the letter will detail the amount of Income Tax you’ve paid and how much you are owed.
Again, if there are any errors or mistakes in the calculations, it’s important to contact HMRC as soon as possible to rectify them before it’s too late.
If you’ve registered yourself for Self Assessment tax returns through the Self Assessment system, you won’t receive a P800 or Simple Assessment letter. These letters are only for those in the PAYE system. Instead, HMRC will automatically adjust your tax bill once they have processed your tax return.
Usually, HMRC will pay you back on the debit or credit that was used to make your last payment. But, if you want to be paid via cheque or directly into another bank account, you can ask them to do so when completing your tax return.