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2010/11 Tax repayments – check your cheque!

HMRC have announced that from mid-July they will start sending out PAYE tax calculations for the 2010/11 tax year, starting with repayments where HMRC think too much tax has been paid. LITRG’s advice if you receive a repayment is to make sure it is right (neither too much nor too little) and check whether you can claim anything else.

Last year, LITRG helped countless taxpayers to decipher and deal with their PAYE ‘P800’ tax calculations. Now we hope to do the same for calculations issued for the tax year which ended on 5 April 2011 (‘2010/11’), starting with people who receive tax repayments.

This guidance is set out under the following headings. We suggest you read it in full, but links are provided to each heading for ease of reference:

Will you be getting a calculation?
Good news first – the repayments
Goldilocks repayments – too much, too little or just right?
How to check the calculation
What to do if you think the calculation is wrong or incomplete, or you do not understand it
Other sources of help
Are you owed tax of less than £10 or do you need to make a claim for tax relief from HMRC?
Earlier years’ repayments
Example letters

Will you be getting a calculation?

Not everyone will get a P800 tax calculation. Some people fill in tax returns, so their tax affairs will be sorted out in that way. For most others, PAYE works well so that you pay everything you owe during the year. Based on their information, HMRC estimate that more than 80% of people will neither owe tax nor be due a repayment. But watch out – HMRC might not know everything they need to know to get your tax right, so check your position even if you don’t receive a calculation.

Sometimes, however, PAYE doesn’t quite work, particularly if you have more than one job or source of pension income, change jobs frequently or move in and out of work. In some (hopefully few) cases, employers or pension providers make mistakes so the wrong tax is deducted. And in some cases, HMRC also get things wrong.

This means that, after the end of each tax year, HMRC have to ‘reconcile’ individuals’ records to tally up your income taxed under PAYE and check that the tax which has been collected matches the amount they think you should have paid overall.

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Good news first – the repayments

HMRC will begin 2010/11 reconciliations in mid-July, issuing calculations if they think you have paid too much tax, closely followed by a cheque.

HMRC hope to have dealt with most repayments by September. They will then start issuing calculations to those who they think have not paid enough tax. We intend to issue further guidance over the summer for those who owe tax, but for now we highlight the importance of checking repayments.

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Goldilocks repayments – too much, too little or just right?

Most people’s reaction to receiving a tax repayment is “thank you very much” followed by a swift trip to the bank to deposit the cheque! But it is vital that before you bank the cheque you ensure that the repayment is correct, because:

  • The P800 is only an estimate, produced by HMRC’s computer. So the calculation is only as good as the data held on the computer.
  • This means that HMRC might have got something wrong, so you could have been repaid too much or not enough!
  • If HMRC repay you too much and you don’t tell them, you could be charged a penalty if they think you were careless in not spotting it.

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How to check the calculation

HMRC will send notes with the calculation to help you check it. Particular points to look out for are:

1. HMRC might have used estimated figures on the calculation, but this will not be obvious to you. Compare all figures to your own records – for example, P60s and P45s from employers and pension payers, P11Ds, and bank and building society statements showing interest and tax deducted.

2. More than one source of income (for example, wages from two jobs) might be added together in a single line on the calculation. This can be confusing – for example, you might have to add up figures from multiple P60s to arrive at the amount shown.

3. HMRC might not know about some other items which could affect your tax calculation. For instance, you should tell HMRC if you have made pension contributions or Gift Aid donations, particularly if either:

a. you are aged 65 or over and your 2010/11 income was over £22,900 (so your calculation shows your age-related personal allowance has been reduced), or

b. you are a higher rate taxpayer (that is, your calculation will show some tax due at 40%).

4. Also, HMRC might not know about certain deductions you are entitled to from your wages. Some common ones - claims for using your own car and business travel and other employment expenses - are described in the low-income workers section of our website.

5. You might be entitled to more allowances than HMRC have included on the calculation. For example, you might have become entitled to the Blind Person’s Allowance (which you do not have to be completely blind to claim); your spouse or civil partner might have become entitled to the Blind Person’s Allowance and they can transfer it to you if they are unable to use it themselves; you might have turned 65 or 75 in the last tax year and be entitled to a higher age allowance; or you might have got married or registered a civil partnership and become entitled to Married Couple’s Allowance (but this only applies if one or both of you was born before 6 April 1935).

6. Equally, you might have lost entitlement to one or more of the above allowances, so HMRC could be repaying you too much if they have not taken account of this fact. The same could apply if you had an extra allowance included in your PAYE code, for example, certain expenses which were deductible against your employment income but would no longer be allowed after you stopped work or changed jobs.

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What to do if you think the calculation is wrong or incomplete, or you do not understand it

You will need to contact HMRC if:

  • you think the calculation is wrong – as above, you must let HMRC know if you think they have repaid you too much
  • you need to claim extra tax reliefs or allowances
  • you need to ask for a full explanation if you do not understand the calculation.

HMRC’s helpline number is 0845 3000 627 (textphone for those with hearing or speech impairment, 0845 302 1408). When telephoning, have the calculation to hand as HMRC might ask you to confirm your National Insurance Number and answer some other questions before discussing it with you.

Always keep a record of:

  • the date and time of your call
  • the name of the person that you spoke to, and
  • a note of what you said and what HMRC said to you.

Unfortunately, 0845 numbers may be very expensive to dial from a mobile phone. If you prefer, you can write to HMRC at the address on the calculation. HMRC might also ask you to write to them to claim extra reliefs or allowances.

Whenever you write to HMRC:

  • include your National Insurance number and the HMRC reference taken from the P800
  • include your full name and address
  • either: explain what you think is wrong and why; explain what additional reliefs or allowances you think you are entitled to; or ask what figures you require an explanation of (we have provided sample letters – numbers 1 and 2 - at the end of this guide)
  • sign and date the letter in ink
  • keep a copy of the letter and any supporting information you send with it
  • clearly state if any enclosed documentation is original and you wish it to be returned to you
  • obtain proof of postage.

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Other sources of help

Independent advice can be sought from a tax professional. Indeed you should consider seeking such help if you think you have discovered a problem which means you have not been paying enough tax and which could mean you could face a bill and penalties.

But what if you are on a low income and cannot afford to pay for advice? There are two charities which might be able to guide you through how to check the figures and explain how the calculations work. In some circumstances, they might also be able to help you to resolve queries directly with HMRC.

TaxHelp for Older People is a charity offering free tax advice to older people (broadly, aged 60 or over) with a net household income of £17,000 or less.

TaxAid helps low-income taxpayers who cannot afford to pay a professional.

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Are you owed tax of less than £10 or do you need to make a claim for other tax relief from HMRC?

If you are due a repayment of less than £10, HMRC will give it to you only if you submit a claim – their computer will not automatically issue it.

Also, you might not get a calculation because according to HMRC’s computer, you are not due one. But you could be entitled to some extra allowances or reliefs, such as those we have outlined above. In that case, you will need to write to HMRC claiming your repayment.

Some examples of why you might be due a repayment and how to claim it can be found under Students – Tax refunds and Pensioners – Claiming a repayment. An example letter (number 3) is provided at the end of this article.

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Earlier years’ repayments

If HMRC thought you were due tax back in any of the years 2007/08, 2008/09 and 2009/10, they have probably already sent it to you. But if not, it might be worth checking whether you are due anything back, particularly if you have discovered you have not claimed enough allowances or other tax reliefs in 2010/11 and the same applied to earlier years. Our third example letter below, adjusted for the relevant tax year(s), might help you to claim a repayment.

Repayment claims have time limits so it is important to consider this issue at the earliest opportunity. But there could be a downside if it turns out that you have not paid enough tax in previous years, which HMRC might then be obliged to collect. So get your facts straight first.

As long as you were not in self-assessment for any of the following tax years, time limits for claiming repayments are:

Tax year 2005/06 (year ended 5 April 2006) - you must claim by 31 January 2012
Tax year 2006/07 (year ended 5 April 2007) - you must claim by 31 March 2012
Tax year 2007/08 (year ended 5 April 2008) - you must claim by 5 April 2012
Tax year 2008/09 (year ended 5 April 2009) - you must claim by 5 April 2013
Tax year 2009/10 (year ended 5 April 2010) - you must claim by 5 April 2014
Tax year 2010/11 (year ended 5 April 2011) - you must claim by 5 April 2015

In cases of ‘official error’, HMRC might agree to issue repayments years prior to 2005/06 under their ‘Extra-statutory Concession B41’. This says:

‘...repayments of tax will be made in respect of claims made outside the statutory time limit where an over-payment of tax has arisen because of an error by the Inland Revenue [now HMRC] or another Government Department, and where there is no dispute or doubt as to the facts.’

Historically, however, such cases have been rare and you would need to be able to show what went wrong and set this out in a letter to HMRC. To guide you, we provide a fourth and final example letter in the file accessible below.

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Example letters

As referred to above, example letters are given in either PDF or Word format below.

Example letters (word format)

Example letters (pdf format)


Contact: Kelly Sizer (please use form at


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