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What the calculations mean

You will only get a letter if HMRC believes that you have under or overpaid tax.

If you do get a letter it will include a tax calculation (form P800) telling you if you have paid too much or too little tax for the tax years 2008-09 and 2009-10.

The calculation shows your total income and the allowances that are due to you for each of these years.

• PAYE Tax Calculations - HMRC Opens new window

If you've over or underpaid

If you have overpaid you will get a full refund.

If you have underpaid you will make additional payments through the PAYE system, provided the payment due is under £2,000.

All payments will begin next year, and no immediate, one-off payment will be required. In cases of genuine hardship HMRC will allow payments to be spread across a period of three years.

If you owe over £2,000, HMRC will write to you again setting out the next steps for repayment.

What to do with your letter

If you get a tax calculation through the post, check it to make sure you agree with the information included.

If you agree with the calculation you do not need to do anything but keep it safe.

If you get an underpayment notice, this is not a demand for payment. HMRC will send you a P2 coding notice from January 2011 letting you know that your tax code will be changed for the tax year 2011-12 to recover what you owe.

• Understanding and checking your P800 Tax Calculation - HMRC Opens new window

Fraud warning

HMRC will only contact you by letter if you are affected by the PAYE tax calculation.

Fraudsters may try to take advantage of the situation, so remember:

• to check the letter - are there spelling errors or poor grammar?
  
• you will not be contacted by phone or email unless prompted
  
• you will not be asked to send bank details or any other personal information to anyone
  
• tax rebates will be refunded by cheque sent directly to you through the post
  
• HMRC will take money through the PAYE system - you will not be expected to send cash or cheque
  
• if in any doubt, visit the HMRC website or call 0845 3000 627

To report a fraud, call Action Fraud on 0300 123 2040 or follow the link below.

• Report a fraud - Action Fraud Opens new window

More on Cross & Stitch

• Introduction to Income Tax (money, tax and benefits section)

• Getting your Income Tax right (money, tax and benefits section)

• Tax allowances and reliefs (money, tax and benefits section)

• Tax codes (money, tax and benefits section)

• Tax refunds and reclaiming overpaid tax (money, tax and benefits section)