Posted: 3. September 2019 by: Rupert Tennant

Tax Overpayments and Underpayments

Tax Overpayments and Underpayments

sesauer September 3, 2019

One of the common problems taxpayers come up against is the issue of overpaying and underpaying taxes. This is what happens for those who pay their taxes in equal instalments over the year, and the payment doesn’t end up matching with their actual income for the year.

When this happens, you’ll get what’s called a P800 document from HMRC, and that’s how you deal with correcting the amount you owe for taxation. It can be a fairly routine thing if you simply don’t know how much you need to pay or it can be a source of problems if something more complicated has happened.

Tax calculation

Those who are employed or receive a pension need to pay income taxes on the money they are paid. This is check by HMRC, and when there’s a discrepancy between what you’ve paid and what you should have paid, you’ll get a notification.

There are two ways to be notified, depending on what’s your source of income. One is called a Simple Assessment letter, and the other is called P800. The documents will show how much you owe and based on what calculation.


Those who are registered to pay their taxes by sending a self-assessment tax return won’t get this document. This is a document for those who have a salary paid by their employer or who receive a pension based on their employment. The document is there to show in the discrepancy in the taxes owed and taxes paid.

In most cases, there are 3 reasons to get a P800

-When you’ve started one job after leaving another and got paid for both.
-When you start receiving a pension
-When you receive a Job Seeker allowance or an Employment and support allowance

A Simple Assessment letter

Another way to go is to get a simple assessment letter. This is a more complicated option in terms of payments, but still not something that should concern you greatly since it’s a standard procedure.  There are 3 reasons to get it:

-When you owe taxes that can’t be repaid right away.
-When you owe HMRC more than £3.00
-When you have to pay taxes on a state pension

It’s a tax bill that you can pay online by logging to your HMRC profile. It can be done with a company card or a credit card if that’s easier for you.

Check the math

Both documents will come with the reason why you need to pay more for your tax bills. That will come in the form of calculating your income and listing the deductions. In the end, you’ll get the tax rate that you need to pay based on how much you earn.

It’s important to check the math on this one and to compare the data provided by HMRC to the one you have. This is done by keeping your P60s and adding them up to see if they match. HMRC is known to make mistakes.

When you’re due a refund

Another correction that can be made by HMRC goes the other way around. It’s a correction in which HMRC states that you have paid too much tax and that you should get a refund. The P800 will tell you how much refund you’re owed and how you can reclaim it.

The claim can mostly be reclaimed online, but there’s a limit as to when you can do it. You’ll need to do it in 45 days. If you don’t claim it during that period, HMRC will send you a cheque.

If you think HMRC is wrong

There’s a chance HMRC is wrong, and that happens in both ways meaning that you might need to get a refund or pay more depending on what kind of mistake HMRC has made. When you think this is the case, you should double-check or even contact your accountant before calling HMRC.

HMRC will probably make adjustments if you can prove that the mistake was on their part. If they don’t agree with you on that matter, there’s still another level on which you can ask for the tax return to be amended.


There’s a chance you might overpay or underpay your taxes. When this happens, you’ll get notified by HMRC that it has happened and you need to make additional payments or get a refund. The documents doing so are called P800 and Simple Assessment Letter depending on how you get your income.

When you get such a document, you should make sure that it isn’t HMRC that made a mistake. If not, the document will explain how and when you need to make the additional payments. It will also state how and when you can get a refund if this is what the mistake is about.

Category: . Tags: ,