A recent wave of letters from His Majesty's Revenue and Customs (HMRC) seeking payment upto £1,400 from UK households has sparked confusion, leaving many aghast after receiving them.
The letters relate primarily to underpaid tax from previous financial years, often due to discrepancies in PAYE (Pay As You Earn) records.
In most cases, HMRC is seeking to recoup tax it believes was not deducted correctly by employers or pension providers. But the situation is not always as straightforward as it seems.
Why Am I Receiving This Letter?
Each year, HMRC reconciles tax records after the end of the financial year in April. If it identifies that an individual has not paid enough tax, possibly due to multiple income sources, changing jobs, or incorrect tax codes, it may issue a 'Simple Assessment' notice, demanding repayment.
HMRC issued 1.32 million Simple Assessment notices in the 2023/24 tax year—a 74% rise from the previous year—largely due to frozen tax thresholds and increased pension income, which pushed more people into taxable brackets.
According to tax advisory firm Blick Rothenberg, 'Experience shows that HMRC may not necessarily 'pick up' on the tax deductions which may be available to a taxpayer for things such as charitable gift aid contributions, pension contributions or professional subscriptions and similar costs.' They caution that if taxpayers pay any tax demanded by the simple assessment without considering available deductions, they may end up overpaying taxes to HMRC.
You Might Not Owe a Penny
Crucially, receiving a letter does not necessarily mean the amount is correct or even due. Experts stress that recipients should not rush to pay until they've checked the figures. Mistakes in employment data, pension contributions, or benefit interactions (such as Child Benefit or Marriage Allowance) can all result in incorrect assessments.
Martin Lewis of MoneySavingExpert.com has advised those affected to review their tax code and earnings history carefully. 'This is not a bill you just pay without checking. Sometimes it's valid, sometimes it's not. And if it's not, you must challenge it—or you may end up paying money you don't owe.'
How to Challenge or Clarify Your Letter
If you believe the calculation is incorrect, you have the right to dispute it with HMRC. You should:
- Review the accompanying tax year overview and calculation.
- Cross-check with your payslips, P60s, or pension statements.
- Contact HMRC through their helpline or online account for clarification.
If you cannot pay immediately but believe the charge is valid, you can request a payment plan. HMRC has also said it will not take enforcement action while a legitimate appeal or challenge is being considered.
Wider Implications and Caution
This episode highlights the growing complexity of personal tax affairs in the UK, especially as more people juggle multiple income streams, freelance roles, and pensions. It also reflects growing reliance on automated systems, which, while efficient, are not immune to error.
Tax charities such as TaxAid and Tax Help for Older People have seen a notable uptick in queries from confused taxpayers. Many of these organisations offer free advice for those on low incomes, especially where vulnerable groups or the elderly are involved.
