HMRC Is Sending Out 4 Million Tax Calculation Letters: What Employers Should Know
Around four million P800 tax calculation letters are landing on doormats and in inboxes this year, telling people whether they’ve overpaid or underpaid tax. If your team has been fielding a few more “is this real?” questions than usual, this is almost certainly why.
Who gets a P800, and why
A P800 is HMRC’s way of reconciling what someone should have paid in Income Tax against what they actually paid through PAYE, self-employment, or a pension. They go out to employees, pensioners and self-employed individuals alike, and being sent one is completely routine. It doesn’t necessarily mean anything has gone wrong.
That said, there are some very common, and often avoidable, reasons a P800 gets triggered:
- An incorrect or out-of-date tax code being used during the year
- Someone having more than one employer within the same tax month
- Receiving Employment and Support Allowance or Jobseeker’s Allowance alongside employment income
- Starting workplace pension contributions partway through the year
Refunds aren’t automatic, and underpayments can be too
If the letter shows an overpayment, the individual has to actively claim it. It doesn’t just appear. The quickest route is online, using the P800 reference number and National Insurance number, with refunds typically arriving within five working days. It can also be claimed through a Personal Tax Account, the HMRC app, or by contacting HMRC directly.
Where there’s an underpayment under £3,000, HMRC can usually collect it automatically through an adjusted tax code, provided the individual is still being paid enough through an employer or pension to cover it comfortably above their personal allowance.
Why this matters for employers
Even though a P800 is strictly a matter between HMRC and the individual, payroll teams tend to be the first port of call when someone gets a letter they don’t understand. Being able to explain, in plain terms, why these letters go out and what to do next saves a lot of back-and-forth.
There’s also a genuine prevention angle here. A good chunk of P800s trace back to things employers have some influence over: making sure starter and leaver information is submitted promptly and accurately, applying tax code notices from HMRC without delay, and getting benefits in kind reported correctly rather than left to catch up at year end. None of that eliminates P800s entirely, since some are simply down to an individual’s personal circumstances, but tightening up the basics does reduce how many of your employees end up with an unwelcome surprise.
How Pecunia Pro can help
- Reviewing how quickly tax code changes and starter/leaver data flow through your payroll process.
- Providing simple, ready-to-use wording you can share with staff about what a P800 is and how to act on one.
- Acting as your team’s first point of contact when employees have questions about tax codes, refunds or underpayments.
Want help getting ahead of this? Call us on 020 8143 1529 or email info@pecuniapro.co.uk and we’ll talk it through.