PAYE RTI News
First P800 tax calculations since RTI on the way
June 9, 2014
HMRC announced today that it is to begin sending out annual statements correcting the PAYE accounts of individual taxpayers. These annual P800 notices, as they are known by HMRC, are sent to all individuals where a credit or debit adjustment of tax is required. In a ‘What’s New’ message on its website dated 9 June HMRC says it has “started the annual automated End of Year Reconciliation process to check whether customers in Pay As You Earn (PAYE) have paid the right amount of tax in 2013 to 2014 tax year.”
This will be the first end of year process under RTI, utilising PAYE data collected from employers’ real time submissions. HMRC expects that around 85% of people in PAYE will have paid the correct amount of tax. Those who have paid too much or too little tax will however receive a P800 tax calculation some time between June and mid-September.
In instances where an individual’s P800 notice shows too much tax was paid, this will usually be re-paid by cheque within 14 days of the date of the individual’s P800 notice. Where a P800 shows not enough tax has been paid according to HMRC’s calculations, the individual’s tax code for the next year will be adjusted automatically to collect the underpaid amount. This is called ‘coding out’ by HMRC. If this is impractical (for example coding out would lead to financial hardship in the next tax year) HMRC’s guidance advises they will contact the affected individuals to let them know what options are available for paying the outstanding tax.
There is usually no need to contact HMRC unless the information contained in a P800 is disputed. HMRC has provided guidance for individual taxpayers on how to go about checking their P800 on its website, and there is also a ‘Contact Us’ page for individuals to get in touch with HMRC if they think their P800 tax calculation is wrong. HMRC anticipates that the End of Year Reconciliation Process will be complete by mid-September.
The issue of P800 notices and HMRC’s reconciliation of the 2013-14 year is potentially significant because it is the first time the operation of RTI can be compared with previous years indicating whether or not it has led to an improvement in the accuracy of PAYE data, which was one of the principal objectives for its introduction.
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