Have I underpaid tax through PAYE?
PAYE is only right for one job on the standard code. A second job, the State Pension, a company car or income over £100,000 can all leave it short — and HMRC collects the gap later, by letter. Six questions show whether a bill is coming, and how big.
Why this exists: Thresholds frozen to 2028 · 2.1m brought into tax in 2023/24 (OBR) — underpayment volume unpublished. Know before the P800 arrives.
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Rates as at 6 April 2026 — the 2026/27 tax year.
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The rules behind this
Every figure above comes from one of these. Where the tool has interpreted rather than calculated, it says so in the finding.
An underpayment of PAYE is collected through a later year's tax code where it is under £3,000 and the taxpayer has PAYE income to code it into.
Where tax is not coded out, HMRC can issue a Simple Assessment, payable by 31 January after the tax year or three months after the notice if later.
The State Pension is taxable income but is paid without deduction of tax; HMRC collects it through the code on other income.
The personal allowance is reduced by £1 for every £2 of adjusted net income above £100,000, but PAYE only applies the reduction when HMRC changes the code.
Arrears may be given up where HMRC failed to make proper and timely use of information it received, and the taxpayer reasonably believed their affairs were in order.
The High Income Child Benefit Charge falls on the partner with the higher adjusted net income and is not collected unless reported.
Questions people ask
Why would I owe tax if I am on PAYE?
PAYE works out each payslip on its own, using the code HMRC gives it. It cannot see your other job, your State Pension, your savings interest or your total income for the year. When the code is missing something, too little is taken — and HMRC only finds out when it reconciles the year, months later.
What is a P800?
The letter HMRC sends after the tax year when PAYE took the wrong amount. It shows the income HMRC has on record, the tax due and the tax paid. It is worth checking line by line against your P60s: it is built from what employers and banks reported, and those figures are sometimes wrong.
Do I have to pay it all at once?
Usually not. Under £3,000 and still on PAYE, it is taken through next year's code over twelve months. You can choose to pay at once, and if the code change would cause hardship HMRC can spread it over longer. Larger amounts come as a Simple Assessment, where Time to Pay is available if you ask before the due date.
Can HMRC write off an underpayment?
Sometimes. If HMRC was told about the income — by you, your employer or the Pension Service — and did not act on it in time, Extra-Statutory Concession A19 lets it give up the arrears. It has to be asked for, and it only helps when the delay was HMRC's.
Is there interest on an underpayment?
Not while it is being collected through your code as agreed. Interest runs on a Simple Assessment or Self Assessment balance from the day it falls due, so paying on time matters there.