Pensioners and employees who have issues with their tax could be at risk of receiving a letter from HM Revenue and Customs (HMRC).
The government department is in the process of issuing both tax calculation letters (P800 letter) and Simple Assessment letters for those who have either paid too much or too little tax for the 2023/24 tax year. According to official guidance, the letters are sent out between June and March of the following tax year, which means there is still time for the letters to be sent out.
Letters can be sent out for a number of reasons, including if you put the wrong tax code on your self-assessment, changed jobs, were paid by both in the same month, or began receiving a pension at work. Furthermore, a Simple Assessment letter could be issued if you owe tax that cannot be automatically taken out of your income or owe HMRC more than £3,000.
It’s important to pay any tax you owe to HMRC as it could charge penalty for any late payments. Typically, the penalty for a late tax payment is 5% of the original amount you owe plus interest.
Read below for a full breakdown of what each letter means and why it could have been sent to you…
P800 letters (tax calculation letter)
According to official guidance, P800s are sent out because you either owe tax or are due a refund. This can be for the following reasons:
- were put on the wrong tax code, for example because HMRC had the wrong information about your income
- finished one job, started a new one and were paid by both in the same month
- received Employment and Support Allowance or Jobseeker’s Allowance
- started receiving a pension at work
If you owe tax to HMRC, it will generally be taken out automatically through Income Tax paid through an employer or pension provider or if you earn enough income over your Personal Allowance to cover the underpayment.
However, the P800 could also be informing you that you’re due a tax refund which can be claimed using the online bank transfer service or by requesting a cheque online. Tax refunds are generally given five working days after a claim is made online or six weeks after you asked HMRC for a cheque.
Simple Assessment tax bill
HMRC will generally send a Simple Assessment letter if it cannot automatically reclaim money owed. Official guidance states this can be the case for the following reasons:
- you have to pay tax on your State Pension
- you owe HMRC more than £3,000
- you owe Income Tax that cannot be automatically taken out of your income
This letter will contain important details you need to check such as your taxable income, any Income Tax you have already paid, and the total tax that you owe to HMRC.
Full details on the different types of letters you could receive for overpaid and underpaid tax can be found here.