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Don’t be caught out by your P800 Tax Calculation this year
For non-self-assessed employees 2010/11 tax bills are due shortly, and industry experts are again fore-warning of many cases of incorrect tax payments, and the subsequent bills. Make sure you check your income and any benefits or expenses you receive on your P800.
What is a P800 Tax Calculation?
Your P800 tells you whether HMRC thinks you have paid the correct amount of tax in the previous year. Your employer files details of your income and tax payments to HMRC at the end of every tax year. If the information does not correlate to the HMRC database, a P800 statement is sent to inform you if you have paid either to much, or too little tax. Depending on the amount owed, the money can either be paid back through PAYE over the following year, or paid in a lump sum.
Why all the fuss?
This time last year, after the introduction of their new IT system, HMRC admitted that the much-improved database had “bought to light discrepancies… and this [had] resulted in a number of incorrect [PAYE coding] notices being issued.” Not only did the discrepancies mean around 45,000 people were affected, but the P800s distributed covered 2 years (2008/09 & 2009/10). Those who received letters requesting payments of £2000 or more had to repay the amount in a lump sum, whereas those owing less could pay the money over the following year through PAYE. In actual fact, many of the bills showing than less than £300 owed were waivered.
Will this year be any different?
In theory, there should be less money outstanding because the P800s only refer to 1 year (2010/11). However many of the reasons why there were so many underpayments of tax for last year’s P800s (2009/10 & 2009/10) still remain. It is anticipated that, unlike last year, HMRC will clamp down on payments due, including smaller amounts.
What if my P800 is wrong?
If you feel your P800 is wrong, or you cannot meet the payments for any reason, give your McLintocks advisor a call on 0845 6807800 to discuss your options. We can help you unravel the documents and establish how to avoid receiving a tax bill next year.
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