Calculations for the end of the tax year 2017
In most cases, tax calculations and deductions are handled by your employer. It is assumed that you pay the correct tax by the end of the year.
Find out if you’re owed a tax refund using our UK Tax Refund Calculator
Premature PAYE Tax Refunds
However, calculating your tax refund is premature if you receive a tax calculation from HMRC in the form of a P800 or a PA302.
The forms indicate that you may have overpaid or underpaid tax.
According to HMRC, PAYE works well for an estimated 85% of people. But certain situations can make tax complicated.
For instance, you work more than one job, have more than one pension, or receive more than one taxable state benefit. This makes calculating tax deductions complicated.
The same applies to when your employer gives you extra benefits or expense payments in addition to your wages.
This article will guide you on what to do when you get a PAYE Tax calculation.
Will you be getting a calculation?
Since the PAYE system works for most people, not everyone will receive a P800 or a PA302. But even when you do not receive a calculation, it will be advantageous to check your position since HMRC might not get your tax right because they don’t know every tax-related thing they need to know.
How to check the calculations for the end of the tax year 2017
- Check the estimated figures on your calculation and compare them against your P60s and P45s. If it is off, informs HMRC right away about the correct amount.
- Check the combined figures for earlier year calculations, especially if you have more than one source of income. The amount shown as PAYE income should be the same as the sum of multiple P60s.
- Check for anything that can affect your tax calculation and your Tax Refund UK offers, especially those that will increase the amount you can claim tax back.
These may include:
- Gift Aid donations or pension contributions
- Taxable state benefit
- Allowances you can claim, such as Blind Person’s Allowance and a Married Couple’s Allowance.
- Check if you’re paying the basic rate or should be tax-free, depending on your earnings.
What to do if you are due a refund (‘overpaid’)
- Make sure your tax refund amount is correct before cash in your check. You may be paid too much or not enough because tax calculations are usually just an estimate. HMRC could also get the tax amount wrong, and you could be penalised for not informing the tax man of overpaid tax refund UK.
- If you think you are due to claim tax back of less than £10, you must submit a claim to get it.
- Check if you are due earlier years’ repayments and submit a claim.
What to do if you owe some tax (‘underpaid’)
- Check why your P800 calculation shows you underpaid tax.
- If you think you don’t have to pay the bill, contact HMRC and argue your case.
- Find out why you did not pay enough tax in a tax year.
- If you have to pay the tax shown on your P800 calculation, know your payment options, such as spreading it over a year or more.
But what if you do have to pay the underpaid tax?
- Find out how your underpayment will be collected. Underpayment is usually collected through your PAYE code over 1 year.
- If you receive the PA302 calculations, payment instructions will be provided.
- If you can’t afford to pay, negotiate the terms with HMRC. You may be able to spread the payment over three years.
- Invoke your right to hardship rules if you are on means-tested benefits.
If you’ve been working in the UK, you may be entitled to claim a UK tax rebate.