Millions of workers urged to look out for important HMRC letter which could lead to HUGE tax refund
Between June and August, the tax office is sending out around four million P800 letters to inform people that they are owed an income tax refund.
1
Workers who pay PAYE tax and pensioners who may have overpaid their tax on pension income are among those who could receive the letters.
There are several reasons you may have overpaid your tax, such as being put on the wrong tax code, starting to receive a pension at work, or receiving Employment and Support Allowance or Jobseekers' Allowance.
You can reclaim any overpaid tax going back four years under the current time limits.
Moneyfactscompare consumer expert Adam French has urged people not to ignore the P800 letters.
"It can be easy to overlook but you shouldn't ignore it because it will let you know if you have paid the right amount of tax," he said.
'If you have changed jobs, worked multiple jobs or received benefits such as maternity or sick pay HMRC may have overestimated your tax bill, and it could owe you a refund.
"On the flipside the letter may show you have underpaid tax due to a change in circumstances or a tax code error.
"If you are owed a refund the letter should include details on how to claim it back, whereas if you owe HMRC money this is usually recovered by changing your tax code instead of demanding a lump sum payment there and then.
'The bottom line is that a P800 letter could mean unexpected windfall, or at least it can give you the chance to stay on top of your tax affairs. However, you won't know either way until you open the envelope.'
An HMRC spokesperson said: "Customers should follow the straightforward instructions in the letter, which explain how to claim it online at GOV.UK or the HMRC app."
What Does My Tax Code Mean? A Simple Guide to Your HMRC Letter
If you receive a letter it will include a link to the Government's website where you can complete an online form to nominate the bank account you want your rebate paid into.
It should then be around five working days until you receive your payment.
In some cases if you don't complete the form HMRC will send a cheque, your letter will state if this is the case.
You can also request to receive a cheque by email or phone, but this will mean you wait longer for the cash to hit your bank account - usually up to six weeks.
If you've received a letter but don't have access to a computer or phone with internet, you can contact HMRC via phone or post.
The phone number to call is 0300 200 3300 while any post should be addressed to:
Pay As You Earn and Self Assessment
HM Revenue and Customs
BX9 1AS
United Kingdom
Remember, you don't have to wait for HMRC to contact you by post if you think you're owed a rebate.
You can sign up for a Personal Tax Account and check if you are eligible for a repayment.
You could get your payment earlier this way, rather than waiting for a letter through the door.
If you've got a smartphone, you can track your tax via the HMRC app too.
You should also be regularly checking your payslip to ensure you're on the right tax code, and having the right amount deducted.
It's your responsibility to check and let HMRC know if it's wrong, otherwise you could end up paying out too much.
Each tax code tells you how much you should be paying to HMRC every month.
For example, the letter "L" on your tax code means you're entitled to the standard tax-free Personal Allowance.
Meanwhile, "M" means you've received a transfer of 10% of your partner's Personal Allowance (£1,260).
If you owe money to the taxman HMRC will collect it automatically over the following year if you are in employment, receive payments through a pension provider or owe less than £3,000.
If this is not possible HMRC will write to you with details of how to pay off the funds due.
Beware of scammers
People are also being warned to beware of fraudsters impersonating HMRC to try and scam victims for money.
MoneySavingExpert.com urges people to make sure any communication they receive is genuine to protect themselves from scams.
Its money editor Hannah McEwen says: "HMRC will always send a letter about any tax you're owed - it'll never text, email or call you unexpectedly and pressure you to take action."
"If you're owed tax and HMRC says it'll send a cheque, you don't need to do anything," she adds.
"It'll automatically send any cheque by post within 14 days of the date on your letter. If you're owed tax from more than one year, you'll get a single cheque for the entire amount."
McEwen also warns people to be wary of following links in letters or messages, as they could be linked to scam sites.
What is a tax code?
You could end up overpaying or underpaying tax if you are put on the wrong tax code.
Your tax code can be found on your payslip, your P60, or by contacting HMRC, and normally looks like some numbers followed by a letter.
It's important to keep track of your tax code, as you can end up on the wrong one due to changing jobs or salaries and HMRC not being informed.
The standard tax code is currently 1257L, meaning you can be paid £12,570 before tax is deducted.
This code has been the same since the 2020/21 tax year, when the personal allowance was £12,500.
How do I check my tax code?
YOU can check your tax code on your personal tax account online, on any payslips or on the HMRC app.
To log in, visit www.gov.uk/personal-tax-account.
If you have one, you can also check it on a "Tax Code Notice" letter from HMRC.
Bear in mind that you might need your Government Gateway ID and password to hand to log in.
But if you don't have this you can use your National Insurance number or postcode and two of the following:
A valid UK passport
A UK photocard driving licence issued by the DVLA (or DVA in Northern Ireland)
A payslip from the last three months or a P60 from your employer for the last tax year
Details of a tax credit claim if you have made one
Details from a self assessment tax return (in the last two years) if you made one
Information held on your credit record if you have one (such as loans, credit cards or mortgages)
Do you have a money problem that needs sorting? Get in touch by emailing money-sm@news.co.uk.
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