HMRC P800 tax calculation explained: owe or refund?

What this kind of letter means

HMRC says you paid £742.18 too little tax last year, because your company car wasn't in your tax code. You don't need to do anything: they'll take it gradually through your pay from April 2027, unless you'd rather pay now.

A P800 is HMRC's end-of-year check for people taxed through PAYE. If you're employed or get a pension, underpayments up to £3,000 are usually collected by reducing your tax-free allowance in a later year, so you pay a bit more tax each month instead of a lump sum. Here that works out to roughly £62 a month over 12 months. Company car benefit is shown on your P11D form from your employer. If the figures are wrong, for example the car dates are wrong, tell HMRC.

Things worth checking

• Check the company car dates and value against your P11D. Mistakes happen when cars change mid-year.
• HMRC never asks for bank details by text or email. Use your HMRC online account through GOV.UK.

Your options

• Do nothing. If it's right, HMRC collects it through your tax code from April 2027.
• Query it. If the figures look wrong, write to HMRC or call them.
• Pay now. Through your HMRC online account, if you'd rather clear it.

If you ignore it

That's fine if the figures are right: HMRC will collect it through your tax code automatically.

What usually decides this

If the figures match your P11D, this is routine and costs you nothing extra beyond the tax. If the car dates or value are wrong, you can ask HMRC to correct it.

The rules

• If you're employed or get a pension, an underpayment of up to £3,000 shown on a P800 is usually collected through your tax code in a later year, not as a lump sum.
  England, Wales, Scotland, Northern Ireland. Source: GOV.UK: Tax overpayments and underpayments
• You usually have 30 days to appeal an HMRC penalty or tax decision. The letter says how.
  England, Wales, Scotland, Northern Ireland. Source: GOV.UK: Disagree with a tax decision

Rules last checked 13 November 2026.

Words you might see

• P800: HMRC's yearly check of whether you paid the right tax through PAYE.
• Tax code: The code your employer uses to work out how much tax to take from your pay.
• P11D: A form from your employer listing benefits like a company car.
• Benefit in kind: Something your employer gives you, other than pay, that you're taxed on.

An example reply

From our worked example. Letter Clear writes one for your own letter, in your name.

No reply is needed if the figures are right.

HMRC will collect the £742.18 through your tax code from 6 April 2027, spread over 12 months. Check your new tax code when you get it.

If you'd rather clear it sooner, pay through your HMRC online account. Find it by searching GOV.UK, not through a link in a text or email.

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