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Have you seen incorrect P800s for 2016/17?

P800 shows refund of tax deducted from interest

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From 6 April 2016 interest is mostly paid gross, and the amount received is generally covered by the taxpayer's savings allowance or savings rate band. But in somw cases  the P800 tax computation for 2016/17 shows tax deducted from interest, and even worse - that tax being refunded to the taxpayer.

The interest figure on the P800 is estimated based on the 2015/16 Self-Assessment Tax Return, so obviously the computer that produces the P800 has not been correctly programmed.

Have you seen examples of these incorrect tax computations on P800s? 

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By SteveHa
17th Jul 2017 10:44

Not yet, though I expect to. I have noticed that Digita has retained the net interest as the default where interest was previously declared, and would have thought it should have automatically changed to gross, with manual intervention to change back to net if required in a minority of cases, so similar incorrect calculations could arise from Tax Returns where this isn't picked up during preparation.

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By David Plastow
17th Jul 2017 11:30

Haven't seen the interest error but did receive one where State Pension income (including a lump sum payment which had been taxed) exceeded the client's Personal Allowance. HMRC wanted to refund 100% of the tax deducted as their calculation showed nil tax due. When queried I was informed to "just ignore it we think there is a problem"!

You couldn't make it up.

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By Wanderer
17th Jul 2017 12:03

Could actually be the right answer!

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By David Plastow
17th Jul 2017 16:13

I doubt it when the client is within Self Assessment and we have not yet completed his tax return to give HMRC details of his other income!

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By Wanderer
17th Jul 2017 16:19

That's a new factor you've introduced. Your original scenario was:-

David Plastow wrote:

Haven't seen the interest error but did receive one where State Pension income (including a lump sum payment which had been taxed) exceeded the client's Personal Allowance. HMRC wanted to refund 100% of the tax deducted as their calculation showed nil tax due. When queried I was informed to "just ignore it we think there is a problem"!

You couldn't make it up.

Based on the facts that you originally quoted, without other income now mentioned, means that the P800Ts could well have been right in that scenario.
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By Vaughan Blake1
19th Jul 2017 16:52

Yes Wanderer, this is the problem of P800s being issued to SATR folks and just including PAYE/Pensions and ignoring everything else. The P800 is normally correctly prepared, it just ignores non PAYE income. The problem is as old as self assessment itself.

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By Wanderer
19th Jul 2017 17:27

Yep, well aware. Two P800Ts recently showing large refunds to clients. Had to tell them these weren't due.

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By gilderda
17th Jul 2017 15:50

Have had the interest issue with one of our clients. Contacted HMRC to correct it, which they did pretty swiftly.

Due to the 0% starting savings rate, the client is no longer a UK taxpayer (income just above PA, mostly derived from interest and pensions). HMRC have assumed that she was still making Gift Aid declarations on her charitable donations however (she isn't), and are now attempting to claw back the tax relief through her P800.

We've had to get a letter from Macmillan (the single biggest donation she makes) to confirm that no Gift Aid has been claimed so we can get the tax charge taken off.

Frankly, it would have been quicker to leave her within self-assessment (where she was up to 2016-17) and have her fill in a tax return than go through all this palaver correcting a P800 riddled with assumptions.

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By Paul.Chillman
18th Jul 2017 11:40

I haven't seen an incorrect one yet for 2016/2017. I was surprised to receive one last month for 2017/2018 !

(The client in question has "retired" and left employment at the end of May, but intends to continue working in a freelance capacity of the opportunity arises.)

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By Paul D Utherone
26th Jul 2017 21:48

Yes. They sent me one today. Only £2.75 tax on (estimated) interest, but still you'd have hoped someone would have managed to program the system correctly for the bew tax year!

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