Tax Overpayments and Underpayments

Tax Overpayments and Underpayments

This article provides an overview of tax overpayments and underpayments and is based on information obtained from the HMRC web site

Overview of Tax Overpayments and Underpayments

If you are either employed or receive a pension, HM Revenue and Customs (HMRC) checks whether you are paying the right amount of tax throughout the year.

They may also adjust your tax during the year if your circumstances change, for example if you receive a pay rise or a company benefit.

If you have not paid the right amount at the end of the tax year, HMRC will post you a tax calculation. This can be a P800 or a Simple Assessment letter.

Your tax calculation will also show you how to get a refund or pay tax you owe.

Tax Overpayments and Underpayments

When you may receive a P800

You might receive a P800 if you:-

  • finished one job, started a new one and were paid by both in the same month
  • started receiving a pension at work
  • received Employment and Support Allowance or Jobseeker’s Allowance

You will not receive a P800 if you are registered for Self Assessment. Your bill will be adjusted automatically if you have underpaid or overpaid tax.

P800s are sent out after the tax year ends on 5th April. You will normally receive yours by the end of November.

When you may receive a Simple Assessment letter

You may receive a Simple Assessment letter if you:-

  • owe tax that cannot be automatically taken out of your income
  • owe HMRC more than £3,000
  • have to pay tax on the State Pension

You can pay your Simple Assessment bill online.

Checking your tax calculation

Your letter will show the income you should have paid tax on. This includes any income from pay, pensions, state benefits, savings interest and also employee benefits.

Compare the figures with your records, for example your P60, bank statements or letters from the Department for Work and Pensions. If your state benefit was paid every 4 weeks, work out the total paid in a year by multiplying your regular payment by 13 (not 12).

If you think your tax calculation is wrong

Contact HMRC if you think that either the amounts used in your letter are wrong or HMRC did not act on information you gave them.

You have 60 days to query your simple assessment in writing or by telephone. The details of how to do that will be mentioned in your Simple Assessment letter.

If your P800 says you can claim a refund online

Your P800 will tell you if you can claim your refund online. You will usually be sent the money within 5 working days. It will be in your UK account once your bank has processed the payment.

If you do not claim within 45 days, HM Revenue and Customs (HMRC) will send you a cheque. You will usually receive this within 60 days of the date on your P800.

If your P800 says you will receive a cheque

Your P800 will tell you if HMRC will send you a cheque. You do not need to make a claim.

You will receive your cheque within 14 days of the date on your P800. If you are owed tax from more than one year, you will receive a single cheque for the entire amount.

If your P800 says you owe tax

HM Revenue and Customs (HMRC) will usually collect the tax you owe in instalments over the next year. This will happen automatically if you:-

  • pay Income Tax through either an employer or pension provider
  • earn enough income over your Personal Allowance to cover the underpayment
  • owe less than £3,000

Other ways to pay


  • Your P800 will also tell you if you can pay the tax you owe online.

By post

  • You can pay with either a cheque, postal order, or bank or building society draft. You must also fill in the paying-in slip included with your P800.

For further information on tax overpayments and underpayments, please contact Stallion Accountancy Services.

About the author...

George Greer is an experienced ACCA qualified Business Owner with a demonstrated history of working in the accounting industry. He is skilled in Accounts and Finance Management, Budgeting and Business Planning with excellent knowledge of Sage and Xero Products. Strong professional with a BSc focused in Business Computing Systems from City University London.

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