PAYE (Pay As You Earn) is the system that employers use to deduct income tax and National Insurance from employees’ wages before paying them. It’s designed to keep things simple—employees don’t have to calculate their own tax, and payments go straight to HMRC.
However, mistakes can happen. If an employer uses the wrong tax code, deducts too much or too little, or submits incorrect payroll information, it can cause problems for both the employee and HMRC.
So, what should you do if something doesn’t look right on your payslip? Let’s break it down.
What If My Employer Uses the Wrong Tax Code?
Your tax code determines how much tax you pay based on your personal allowance and circumstances. It’s set by HMRC, but employers are responsible for using the correct code when processing payroll.
If the wrong tax code is used, you could:
✅ Overpay tax – meaning HMRC may owe you a refund.
✅ Underpay tax – meaning you may have an unexpected bill later.
Why Do Tax Code Errors Happen?
Common reasons include:
🔹 Job changes – If you start a new job, your employer might use an emergency tax code until HMRC updates it.
🔹 Multiple jobs – If you have more than one employer, your tax-free allowance may be split incorrectly.
🔹 Work benefits – Things like company cars or bonuses can affect your tax code.
🔹 HMRC updates – If HMRC makes an adjustment but doesn’t notify your employer in time, errors can occur.
How to Fix a Wrong Tax Code
If you spot a mistake:
1️⃣ Check your tax code – It’s usually listed on your payslip or in your HMRC online account.
2️⃣ Compare it with HMRC’s tax code notice – You should receive this in the post or via your online account.
3️⃣ Speak to your employer – They may need to correct it on their payroll system.
4️⃣ Contact HMRC if necessary – If your employer says everything is correct but you still think there’s an issue, call HMRC to check.
If you’ve overpaid tax, HMRC will usually refund it automatically. If you’ve underpaid, they’ll let you know how much you owe and whether you can spread the payments.
Does Everyone Receive a P800?
A P800 tax calculation is a letter from HMRC that tells you if you’ve paid too much or too little tax.
However, not everyone receives a P800. You’ll only get one if HMRC identifies an error in your PAYE tax.
🔹 If you’ve overpaid tax, your P800 will explain how to claim a refund. Sometimes, HMRC sends refunds automatically.
🔹 If you’ve underpaid tax, the P800 will show how much you owe and how to pay it. HMRC may adjust your tax code so the money is collected gradually.
Who Won’t Get a P800?
🚫 Self-employed people – If you submit a Self Assessment tax return, any underpayments or overpayments will be adjusted there instead.
🚫 Some PAYE taxpayers – If HMRC doesn’t detect an issue with your tax, you won’t receive a P800 at all.
If you think your tax is wrong but haven’t received a P800, you can log into your Personal Tax Account on HMRC’s website to check your records.
What Should I Do If My Tax Calculation Is Wrong?
If you receive a tax calculation (or notice that you owe money) and think it’s incorrect, don’t ignore it! Mistakes can take time to fix, so it’s best to act quickly.
Here’s what you should do:
1️⃣ Speak to Your Employer First
If you’re on PAYE, your employer is responsible for reporting your income correctly. Ask them to check their records and confirm that everything matches up.
2️⃣ Contact HMRC If Needed
If your employer insists they’ve done everything correctly, but you still think there’s an issue, contact HMRC. You can call them or check your tax records online.
3️⃣ Request a Correction
If HMRC confirms that a mistake was made, they’ll either adjust your tax code, issue a refund, or let you know how to pay any shortfall.
4️⃣ Set Up a Payment Plan If You Owe Tax
If you owe tax due to an error, you may be able to set up a payment plan to spread the cost over time.
How to Avoid PAYE Issues in the Future
While you can’t always prevent mistakes, you can reduce the risk of tax problems by:
✅ Regularly checking your payslip – Make sure your tax code and deductions look right.
✅ Updating HMRC if your circumstances change – Things like changing jobs, getting a pay rise, or receiving work benefits can all affect your tax.
✅ Keeping track of letters from HMRC – Don’t ignore tax notifications – they might contain important updates about your tax status.
✅ Using HMRC’s online services – You can check your tax records, update details, and view P800 calculations through your Personal Tax Account.
Need Support with a PAYE Problem?
PAYE mistakes can feel confusing, especially when you’re handed a tax bill you weren’t expecting or can’t make sense of your payslip. But you’re not alone.
At Blue Spire, we help individuals understand their tax position, speak with HMRC if needed, and make sense of what’s gone wrong—without the jargon or the headache. Whether it’s a wrong tax code, an unexpected P800, or a payroll error, we’ll guide you through your options clearly and calmly.!
📞 Prefer to talk it through? Give us a ring.
📧 Drop us an email if you’ve spotted something odd on your payslip.
📍 Or pop into our Chichester office for a friendly chat.
Whatever the issue, we’ll help you feel confident and back in control.
| If you need support with PAYE matters, get in touch with our team today. |
