What is Underpayment of Tax? UK Definition 2026/27
Quick Answer
When you have not paid enough tax in a year, usually collected via tax code.
Definition of Underpayment of Tax
An underpayment occurs when you have not paid enough tax during the tax year, often due to incorrect tax codes, multiple employments, or untaxed income. HMRC typically collects underpayments under £3,000 by adjusting your following years tax code. Larger amounts may need paying directly.
Underpayment of Tax — Key Facts for 2026/27
| Collection threshold | £3,000 via code |
| Code adjustment | Spread over year |
| P800 notification | Usually July-November |
| Appeal deadline | 60 days from P800 |
How Underpayment of Tax Works — Example
- 1Underpayment discovered: £2,400
- 2Below £3,000: Collected via tax code
- 3Monthly impact: £2,400 / 12 = £200
- 4Tax code reduced by: 2400 (K code possible)
- 5Higher earner: Pays £200 extra per month
How Underpayment of Tax Affects Your Tax
Underpayments can be a shock and reduce your take-home pay for the collection year. Check your tax code and P800 carefully. If you think HMRC is wrong, challenge within 60 days. Extra Statutory Concession A19 may help if HMRC delayed unreasonably.
Official HMRC Guidance on Underpayment of Tax
For official guidance, refer to HMRC's documentation. Tax rules can change, so always verify current rates and thresholds on gov.uk.
HMRC: Tax overpayments and underpaymentsFrequently Asked Questions about Underpayment of Tax
Related Tax Terms
Accuracy Note
This information is for guidance only and is based on 2026/27 tax year rates. Tax rules are complex and your circumstances may differ. For personal advice, consult a qualified accountant or tax adviser.