PAYE: Was there an over or under payment on your payroll?

If you are an employee who pays tax through a payroll system, including if you are a director, you may have received a Form P800 from HMRC if there were any discrepancies in the payroll calculations for the year ended 5 April 2014. HMRC have now completed their annual reconciliations taking into account salaries, pensions and subsequently the tax due for the last tax year. Action needs to be taken for any over or under payments of tax. HMRC have been working on this process from mid June until mid September so you may have received this notice some time ago.

Overpayments

These result in a refund being due to the taxpayer, typically issued by cheque within a few weeks from receiving the P800.

Underpayments

These require settlement from the taxpayer, typically spread over 12 months via their tax code in the following tax year (so now 15/16). In some circumstances though, particularly where large errors have occurred, HMRC will request different payment terms. Frequently, payroll administrators calculating payroll for an employee or director make small and sometimes even large errors. It is worth noting.

However, HMRC make mistakes as well so it is important to review any P800 you have received to ensure it is correct.

To increase your knowledge of the payroll system further, read our related article “What are your PAYE commitments under RTI?” Figurit are up to date with common payroll issues. If you need assistance with managing your payroll we can point you in the right direction. Call one of the commercial team to discuss further: 020 7376 9333