What Is A P800 And How Does HMRC Calculate It?

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

A P800 has the potential to make or spoil your day, depending on whether you owe more tax than you realised or you’re actually in line for a refund. But whatever situation you find yourself in, you may have other questions – most pressingly, ‘how exactly did HMRC calculate this P800’?

Well, let’s go over the who, what, when, where, and why’s of the P800 Form, and try to shed a little light on just how the UK’s leading tax body can end up quoting you the wrong tax bill.

What is a P800 Form?

A P800 is a type of tax calculation performed by HMRC to ensure we’re all paying the right amount of tax. If they calculate that you’ve under- or overpaid, you’ll receive a letter with a P800 Form, outlining how much is due and how you need to pay, or how you’ll be refunded.

P800s are usually dispatched at the beginning of the tax year, so if you’re line for one, chances are it’ll land on your doormat some time in mid to late April. It’s not a hard and fast rule, though, and you may receive a P800 at any point 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?

P800 calculations are usually only made against those who earn their income through PAYE (Pay As You Earn) and are not subject to a yearly Self Assessment tax return.

That means that most self-employed people will never seen a P800 Form, since their tax payments are calculated by Self Assessment returns. Any mistakes in your Self Assessment will be spotted once the tax return is being processed, and HMRC will reach out to you to rectify the problem.

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?

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 taxpeople, 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 touch point – 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 you P800, or want more information, you can contact HMRC for a detailed explanation of their calculation before agreeing to pay or accept a refund.

If 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 (ie. 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’re in the unlucky camp of people who’ve been served with an P800 that documents an underpayment of tax, the letter HMRC will have included in your P800 will outline the steps you need to take to pay off your remaining tax.

Usually, you can pay online in a simple lump sum. HMRC may also decide to make an adjustment to your PAYE tax code for the upcoming tax year and claim your unpaid tax through your monthly wages, just as they would any other tax payment.

Once you’re all squared up, your tax code will revert to normal.

How to claim a refund from a P800

If you’ve received the joyous news that the taxman actually owes you money for a change, there’s still a little more to be done to claim your refund. (You didn’t expect them to make it easy, did you?)

If your P800 Form suggests you’re owed a refund, you need to make a tax rebate claim to HMRC. You’ll need your Government Gateway user ID and password, which you may need to make, if you’ve not signed into the gov.uk website before.

To make an account, you’ll need your National Insurance number, your post code, and/or some more of proof of ID, 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 is successful (which it should be, given you’re quoting from an HMRC P800 calculation), you should expect to see your refund arrive in your bank account within five working days of the payment being processed.

How can Crunch help me?

P800 Forms are only usually sent out to those earning via PAYE – or in other words, full-time employees – rather than the to the self-employed community. If you’re already a client here at Crunch, or you’re self-employed, you’re unlikely to need to any help with P800 tax calculations.

The self-employed community pay their taxes via the annual Self Assessment tax return, which is where Crunch can lend you a hand!

Clients on our paid accountancy packages get instant access to our in-house accounting experts. They can help you manage your books, keep you up to date on upcoming tax deadlines, and even complete and file your Self Assessment tax return on your behalf.

All you need to do is keep a record of your incomings and outgoings, and our experts take care of the rest!

If HMRC believe there’s any issues with your Self Assessment and believe you need to pay more or are owed a refund, we can help you find the right solution.

For more information about Crunch’s accountancy packages, check out our Pricing page, or give one of our friendly Sales team a call for a free consultation.