Thousands of people face 'unexpected' tax bill letter from HMRC
Thousands of people face 'unexpected' tax bill letter from HMRC
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Hundreds of thousands of savers have been warned they could be hit with a surprise tax bill this spring. HMRC normally sends out P800 letters, which tell you if you have overpaid or underpaid tax, by the end of November - but some people may not receive it until the end of March 2025. The Sun reports that the delay is down to HMRC receiving "higher than expected" information about interest earned on savings accounts.
Savings rates have dramatically increased over the last few years after the Bank of England had increased interest rates - but you can only earn a certain amount in interest before you have to pay tax on what you’ve made. If you’re a 20% rate taxpayer, you can earn £1,000 in savings interest before you have to pay income tax on it, while higher 40% earners can earn £500 in savings interest before paying tax.
Additional rate 45% taxpayers don’t get any tax-free savings allowance. You can put up to £20,000 a year into an ISA savings account and any interest earned is tax-free. An estimated 2,070,000 people are expected to owe tax on their savings interest in 2024/25, according to figures from AJ Bell. Laura Suter, director of personal finance at AJ Bell, said: "We know that lots more people will be landed with unexpected tax bills this year as they have breached their tax-free savings allowance and will owe tax on their savings interest.
"But this latest warning from HMRC means some people won’t find out they owe additional tax until just days before the new tax year, when their new tax code will kick in. For many, it will leave their pay packet short with very little notice.". A spokesperson for HMRC said: "It’s important that we collect the correct tax from taxpayers. Due to higher than expected volumes, some customers may have to wait to receive their P800s, including some PAYE customers.”.
If you’ve underpaid tax and you owe HMRC money, then this is normally deducted from your pay slips. If your P800 says you’ve overpaid tax and you're owed money, you can claim a refund online. You can claim using the online bank transfer service or request a cheque online by providing the reference number from your P800 letter and your National Insurance number. You can also claim a refund through your personal tax account, through the HMRC app or by contacting HMRC and asking them to send you a cheque. You’ll be sent the money within five working days if you’ve claimed online, or six weeks if you’ve asked HMRC to send you a cheque.
