Hundreds of thousands face shock from HMRC after delay sending out letters

Hundreds of thousands face shock from HMRC after delay sending out letters
-Credit:Reach Publishing Services Limited


Hundreds of thousands face a shock tax bill in April as HMRC delays sending out vital letters. Savers are set to be hit with a surprise tax bill this spring as HM Revenue & Customs (HMRC) is delaying sending out vital letters by up to four months.

HMRC says it normally aims to issue P800 letters, which let you know if you have overpaid or underpaid tax, by the end of November. It said this is because it's received a "higher than expected" volume of information about interest earned on savings accounts this year.

This means many taxpayers may not receive their P800 letters until March or April. Steve Webb, former pensions minister and partner at LCP, said: "HMRC will normally collect underpaid tax through a change to your tax code, so it would be a nasty shock if you only find out at the end of March about a change that will happen within the next week."

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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 it. For many, it will leave their pay packet short with very little notice."

“It appears HMRC has been caught off guard and is under-resourced to deal with the huge increase in the number of taxpayers," Ms Suter added. "Despite the government itself forecasting a huge increase in taxpayers, it would appear it hasn’t been able to keep up with the volume and is delayed in telling taxpayers what they actually owe."

"It is important to keep good records so that you know what savings income you have earned and set aside part of it to pay tax bills rather than spending it all," Mr Webb advised. "It is also a reminder to make sure that you are taking advantage of the various forms of tax-advantaged savings such as ISAs, to minimise the total amount of tax you end up paying on your savings”.