HMRC is set to send out around four million P800 letters between June and August this year, alerting workers about potential income tax refunds. These letters, which could contain substantial sums, have prompted experts to advise workers not to overlook them, as they offer a chance to ensure tax affairs are in order.
The P800 letters are being issued to individuals who may have overpaid or underpaid their tax in previous years.
This year, workers with multiple jobs, changes in their tax codes, or those receiving benefits like maternity or sick pay, may be among those affected. According to experts, it’s crucial to open the envelope and read the letter carefully, as it could either bring unexpected windfalls or help clarify any discrepancies in tax payments.
What the P800 Letters Mean for Workers
The P800 letters serve as a notice from HMRC informing workers whether they have overpaid or underpaid their tax. In cases where tax has been overpaid, workers may be eligible for a refund.
This typically occurs when HMRC overestimates the amount of tax due due to changes in employment circumstances or benefits received. Adam French, a consumer expert from Moneyfactscompare, stressed that it is important to pay attention to these letters because they provide an opportunity to correct any miscalculations in tax payments.
“If you have changed jobs, worked multiple jobs or received benefits such as maternity or sick pay HMRC may have overestimated your tax bill, and it could owe you a refund.” French said.
On the other hand, the letter could also indicate that workers owe additional tax due to changes in their circumstances or errors in their tax code. If this happens, HMRC will typically adjust the tax code to recover the outstanding amount, avoiding the need for a lump sum payment.
According to MoneySavingExpert.com’s Hannah McEwen, HMRC will never contact individuals about refunds via text, email, or phone call. It is always through a formal letter. If you are owed a refund, HMRC will send a cheque within 14 days.
For those who owe money, adjustments will be made directly to their tax code to spread out the payment over time.
How to Act On Your P800 Letter
When you receive a P800 letter, it will provide you with clear instructions on how to proceed. If you are owed money, you will be advised on how to claim it online or via the HMRC app. If a refund is due, there’s no immediate action required beyond following these instructions to claim the money.
However, if the letter indicates an underpayment, the tax owed will typically be collected via changes to your tax code. In this case, the amount will be deducted gradually from future paychecks, spreading the financial burden over a period of time.
