Millions of UK workers may be entitled to hundreds of pounds back from the taxman, as HMRC continues to issue P800 letters detailing tax overpayments. A P800 is an official tax calculation sent by HM Revenue and Customs (HMRC) to individuals who pay tax through the Pay As You Earn (PAYE) system via a job or pension. It outlines whether you have overpaid or underpaid tax, shows your total income and tax deducted, and explains how to claim a refund or pay any money owed.
Average Overpayment Reaches £689
According to a survey by financial services company Canada Life, 31% of adults have been on the wrong tax code at some point, with the average overpayment worth £689. This means many workers could be missing out on significant sums simply because their tax code is incorrect.
If you receive a P800 letter showing an overpayment, you can claim your refund using the online bank transfer service or request a cheque online. To do so, you will need the reference number from your P800 letter and your National Insurance number.
Martin Lewis Urges Workers to Check Tax Codes
Financial expert Martin Lewis, known for his work with the BBC and ITV, has repeatedly stressed the importance of checking your tax code. He said: “Do you know what your tax code is? If you’re an employee you need to, because millions of them are wrong each year and if they are wrong, legally it’s your responsibility not your employer’s and not HMRC’s, to ensure it’s correct.”
He added: “It could mean you’re paying far too much tax each year. You don’t want that. It could also mean, you’re paying too little tax. Sounds good? It isn’t, because at some point they WILL catch up and make sure you pay the tax that you owe. So you could be hit, slapped across the face, with a big tax bill and not have the cash to pay it, which is a nightmare. So, each year when you get your tax code you should check it, and if you’ve never checked it before, it’s worth going and finding it now and doing a check.”
Understanding Your Tax Code
Tax codes can be confusing, but they determine how much tax you pay. Here is a breakdown of common codes and what they mean:
- L – You’re entitled to the standard tax-free Personal Allowance. The most common code is 1257L.
- M – Marriage Allowance: you’ve received a transfer of 10% of your partner’s personal allowance (£1,257).
- N – Marriage Allowance: you’ve transferred 10% of your personal allowance to your partner.
- S – Your income or pension is taxed using the rates in Scotland.
- T – Your tax code includes other calculations to work out your personal allowance, for example, it’s been reduced because your estimated annual income is more than £100,000.
- 0T – Your personal allowance has been used up, or you’ve started a new job and your employer doesn’t have the details they need to give you a tax code.
- BR – All your income from this job or pension is taxed at the basic rate (usually used if you’ve got more than one job or pension).
- D0 – All your income from this job or pension is taxed at the higher rate (usually used if you’ve got more than one job or pension).
- D1 – All your income from this job or pension is taxed at the additional rate (usually used if you’ve got more than one job or pension).
- NT – You’re not paying any tax on this income.
Tax codes starting with K mean you have income that isn’t being taxed another way and it’s worth more than your tax-free allowance.
How to Claim Your Rebate
If you’ve received a P800 letter indicating an overpayment, don’t delay. You can claim your refund online using the government’s bank transfer service, or request a cheque. Ensure you have your P800 reference number and National Insurance number handy. Even if you haven’t received a letter, it’s wise to check your tax code regularly to avoid future surprises.
