Posted by Nick Day on 24 May 2013

HMRC P800 Tax Calculations for 2012-13

HM Revenue & Customs (HMRC) have started the automated end of year process for the 2012-13 tax year in which they issue automatic P800 tax calculations to reconcile the PAYE affairs of taxpayers who in theory have simple affairs.

Tax Refunds and Further Tax

HMRC estimate that about 3.5 million taxpayers will be due tax refunds and about 2 million will owe further tax, which will usually be collected via the alteration of next year’s PAYE codes.

PAYE collects the right amount of tax in 85% of cases but this end of year reconciliation process is needed to take into account changes in circumstances, jobs, receipt of pensions, etc. that lead to the incorrect amount of PAYE tax being withheld in the year.

P800 Calculations

However, in our experience, the P800 calculations are often incorrect and/or do not take into account the full individual circumstances of the person in question. If you have complex affairs and for example, receive untaxed income such as rental income, or are a 40% taxpayer and receive investment income that has not been taxed (or taxed at source at just 20%), you need to complete a Self Assessment Tax Return.  This will ensure you pay the correct amount of tax each year but also enable you to claim refunds

If you have complex affairs and for example, receive untaxed income such as rental income, or are a 40% taxpayer and receive investment income that has not been taxed (or taxed at source at just 20%), you need to complete a Self Assessment Tax Return. This will ensure you pay the correct amount of tax each year but also enable you to claim refunds

This will ensure you pay the correct amount of tax each year but also enable you to claim refunds if, for example, you are a 40% taxpayer and make personal pension contributions.  Harsh penalty and interest charges will be imposed by HMRC for late tax return filing and late payment of tax.

For the current 2013/14 year, HMRC has brought in a new system of PAYE “real time information” (RTI) reporting which aims to improve the accuracy of the PAYE system and should reduce the need to for the end of year reconciliations in future.

If you receive a P800 tax calculation saying your have underpaid tax owed for previous years, it may well be possible to appeal under what is known as an “Extra Statutory Concession”.  Under this concessionary treatment, HMRC is not supposed to collect tax owed if it has failed to use your tax information on time i.e. broadly within twelve months of the end of the tax year in which the information is received by HMRC.

Tax Innovations

Tax Innovations has a large client base of personal tax return customers and can assist with your personal tax affairs if these are complex.  Please Cclick here for details of the personal tax services we provide.

Contact us

If you would like any advice regarding the above article or would simply like to discuss other ways in which we could help you or your business, please contact us on 01962 856 990 or customerservice@taxinnovations.com.