HMRC have begun issuing their end of year tax reconciliations for 2015/16, and are expected to have sent around 6 million of these forms P800 to taxpayers by the end of November. 

Those receiving P800 tax calculations are advised to check them carefully to make sure that the calculation is correct and that any over or underpayment is reasonable.  HMRC estimate that around 85% of people will have paid the correct amount through PAYE, which means that a substantial number might not, and taxpayers do have an obligation to notify HMRC of any mistakes.

 Differences between the amount owed and the amount collected can occur for a number of reasons, such as:

  • The latest PAYE code issued was not up-to-date, or was issued too late in the year for the employer to apply it.
  • The PAYE code includes estimates of income such as rental income or benefits in kind which are not the same as actual income.
  • The PAYE code includes estimates of payments such as pension contributions or gift aid donations which are not accurate.
  • The taxpayer has started to receive a state pension or other taxable state benefits during the year.
  • The PAYE code includes incorrect figures for tax underpaid in previous years.
  • HMRC could have made an error in their reconciliation.

What happens if there is an over or underpayment

  • Overpayments will generally be repaid to the taxpayer by way of repayable order.  This is usually issued by HMRC within 14 days of issuing the P800 calculation.
  • Underpayments will, in most cases, be collected through the 2017/18 tax code.  Those who would prefer to make a single payment should be able to arrange with HMRC to do so.
  • Very rarely, if the underpayment cannot be collected through the tax code and the taxpayer will not make a voluntary payment, HMRC will issue a self-assessment tax return to collect the underpayment.

Amounts which HMRC will not collect or repay

HMRC will not collect or repay amounts of tax which fall within their tolerance levels as it is not cost effective for them to do so.  This means that:

  • If tax underpaid is £49.99 or less HMRC will not seek to collect it.
  • If tax overpaid is £9.99 or less HMRC will not repay it.

This year, for the first time, HMRC have indicated that they intend to issue P800 calculations to taxpayers whose over or underpayment falls within the tolerance levels, although their policy of not collecting or repaying these amounts has not changed.


HMRC have some limited guidance about P800 tax calculations on their website.

The Low Incomes Tax Reform Group (LITRG) has more comprehensive guidance, including detail about how to challenge incorrect calculations.