HMRC Letters - What to do

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A sharp intake of breath is perhaps the most predictable reaction to spotting the dreaded “HMRC” logo on an envelope with your name on it… after all, when does the taxman ever send good news?

In fact, their missives can sometimes contain news of the positive variety – but more on that later.

The first piece of advice is to open any letter you receive from them. “Many of us don’t,” says Gillian Wrigley, a technical officer with the Low Incomes Tax Reform Group (LITRG), a charity which helps people deal with their tax problems as well as speaks out on their behalf.

“While that’s understandable, you’ll only be storing up problems if there is an issue you need to deal with.”

HMRC scam letters

Gillian’s second tip is to ensure that the letter is genuine.

“Scam emails are commonplace – but there are scam letters too. If you’ve any doubts whatsoever, ring up HMRC… using an official number from their website, not one on the letter.”

Signs of a scam letter could include asking you to 'act immediately'. If it’s the first time you’ve heard from HMRC about an ‘urgent payment’, it’s likely to be a scam letter. HMRC will rarely demand payment within a short time frame. Instead, they will give you details on how to contact them to discuss a genuine late payment and a way forward. If you get a letter that asks for your bank details or give bank details for payment then you should always err on the side of caution. Contact HMRC using the details on their website to discuss the contents of the letter.

Mike Page of Michael Page Accounting warns that the scammers also call and send texts. “If someone contacts you and says you owe tax… and you must pay it immediately or face serious consequences… tell them that you’ll pay online to the HMRC website. That should make them go away.”

Good news, bad news… or neither?

Most HMRC letters simply tell you what you need to know – and can put your mind at rest. So, let’s start with one that you should receive around January containing your tax code for the forthcoming tax year.

“This sets out what you can earn before you start paying tax and also identifies the sources of income that the taxman has records on,” says Gillian. “It deserves your full attention – especially if you receive income from more than one source.”

One piece of good news is that the personal allowance for the year is £12,570 for 2025/26. ^[1].

“If you think there’s a mistake,” says Gillian, “query it. If they’ve got it wrong you could end up paying too much tax or too little… and having to pay it back.”

“If you’re happy to go online, log onto the Government Gateway,” adds Mike Page. “It’s easy to set up your own personal tax account, correct any mistakes and keep tabs on everything else happening with your tax.”

Hold onto these!

At the end of each tax year, you’ll receive another important letter showing what you have paid as well as the tax code applied. This is your annual tax summary - another vital document to scrutinise, especially if your circumstances have changed or you have multiple sources of income.

Around the same time, your P60s will come direct from your employer and/or pension provider and these too are important to read and retain as they spell out what you’ve been paid gross, net, and what’s gone to the taxman. Use these to check that your annual tax summary is correct.

It’s good news…

If you receive employment or pension income and pay tax through Pay As You Earn (PAYE), you can sometimes pay too much tax – and be due a refund.

Common reasons are starting a new job and having an emergency code applied or holding a job for less than the whole tax year. Those receiving pensions can find that the amount they’ve drawn out might have reduced and the taxman has only just found out, or they’ve paid too much tax on a pension lump sum.

Either way, you should receive a P800 notification - and an automatic repayment. If you think you have overpaid, but not yet received a P800, contact HMRC direct or go to your personal tax account on their website.

Neither good or bad…just important

Out of the blue, HMRC write requesting you to make a “self-assessment” tax return. If you’ve never had one before, it might be tempting to ignore the letter as not being applicable.

“Don't… whatever you do,” advises Mike Page, “as you could face painful fines. The taxman thinks you have other sources of income that he doesn’t know about. Even if he’s wrong, you must tell him that. The letter will tell you precisely how to do that.”

Finally, the bad news…

You receive a letter, it’s genuine, and it tells you that you have underpaid your tax. You’ve checked that it’s not a mistake in the coding… and you still owe money.

“The first step is always to get in touch quickly,” says Gillian Wrigley. “If you don’t have the money to hand, explain that and they should devise a doable payment plan. It might seem hard to believe, but HMRC is staffed by humans, and if there IS a problem and you contact them straightaway, they will usually be helpful.

“If you’re nervous, find it difficult to communicate or have a disability, HMRC are trained to spot this - and can either offer to meet you in person or pass you to someone who can provide extra support. But never be afraid to ask for extra help.”

Whatever you do then, do open those brown envelopes: leaving them to pile up behind the clock is never the best way to deal with the taxman – and just sorting out the bad news might give you a better night’s sleep…

Helpful websites

• Low Incomes Tax Reform Group can be contacted though www.litrg.org.uk

• Free, independent help for older people on a lower income is available through the charity Tax Help For Older People – www.taxvol.org.uk

• And another port of call is Citizens Advice: https://www.citizensadvice.org.uk/debt-and-money/tax/problems-with-tax/help-with-tax-problems/ 

• To set  up your personal tax account go to: https://www.gov.uk/personal-tax-account

Sources

[1]  https://www.gov.uk/income-tax-rates