Millions of Britons could be in for a tax windfall this year as HMRC prepares to send out P800 forms. These letters could be welcome news for nearly eight million people who have overpaid tax due to system errors.
RIFT financial experts have crunched the numbers and predict that this fiscal year will see a large amount of P800 falling on the doormat. Their analysis, based on historical trends, suggests that a significant number of PAYE workers might have paid more tax than necessary.
In 2015, seven million P800 forms were sent out, affecting around 26.5% of employees who pay PAYE. With the number of PAYE taxpayers increasing, the same percentage today would mean that around 7.6 million people could be entitled to a refund.
RIFT’s findings indicate that it is typically employees paying PAYE, rather than the self-employed, who are affected by these discrepancies.
Bradley Post, chief executive of RIFT, explained why so many people are owed a refund: “HMRC’s PAYE system is an extraordinary tax collection machine, but it’s not perfect and millions of mistakes are made every year. However, HMRC’s internal system of checks and balances means it often catches these mistakes in retrospect and does everything it can to ensure people receive a refund or top up what they owe.”
He encouraged people to keep an eye on their messages for “very good news”. The expert also noted that while HMRC easily picks up on simpler cases, some more complex taxpayers may benefit from “appointing some tax refund experts to make sure they get every penny they are owed”.
So what should you do if you receive a P800 letter from HMRC?
Receiving this letter may mean that you have overpaid or underpaid tax and that you need to settle the balance by receiving a refund or sending the rest of your debts to HMRC.
The letter will clarify which category you fall into and what the next steps should be based on your situation. If you are due a refund, RIFT experts recommend using the HMRC refund website application as it is the “quickest way” to submit your tax refund claim.
Those who do not have the option to do so or do not react within 21 days of the form being issued will receive a cheque from HMRC in the post. People who have paid less than they should will be informed of the amount they owe and must pay it to HMRC as soon as possible.
If you think there is an error in your final P800 calculation, you can challenge it by speaking to HMRC.
