HMRC savings interest letters, checking your P800 or PA302
Overview
This guide explains HMRC letters about tax on bank and building society interest for the 2025/26 tax year, 6th April 2025 to 5th April 2026. A P800 is an end-of-year PAYE tax calculation; a PA302 is a Simple Assessment tax bill. They have different payment and challenge procedures, so identifying the letter correctly is essential.
HMRC has announced a further batch of Simple Assessment letters relating to bank and building society interest between October and December 2026. Tax calculations can arrive at other times too, generally between June and the following March after a tax year ends.
Savings interest can be taxable even if you have never needed a tax return. However, the Personal Savings Allowance, any unused Personal Allowance and the starting rate for savings may cover some or all of it. ISA interest is normally tax-free.
This is general guidance. Check your complete tax position and the instructions on your letter before acting.
Detailed Content
What is a P800?
A P800 shows HMRC’s calculation where the Income Tax paid through PAYE does not match the amount due. It may show an underpayment or a refund. It is not a Self Assessment return or, by itself, a penalty or investigation.
HMRC combines information about wages, pensions, savings interest, allowances and tax already deducted. If you owe less than £3,000, pay tax through an employer or pension provider and have enough income to collect the underpayment, HMRC will usually adjust your tax code. Collection normally takes place over 12 months from the start of the following tax year.
If HMRC cannot collect the tax this way, it will explain the alternative arrangements. Do not assume every P800 requires a separate January payment.
What is a PA302 or Simple Assessment?
A PA302 tells you HMRC’s Simple Assessment calculation and the tax to pay. HMRC uses this route for certain straightforward liabilities that cannot be collected through a tax code, including some savings interest and pension tax.
You normally need to pay the bill yourself using the Simple Assessment payment instructions. Bills can be below £3,000; that figure is not a minimum liability.
If you receive a revised assessment for the same year, check payments already made. The latest calculation shows the total liability, not necessarily an additional amount to pay in full.
How much savings interest is tax-free?
For 2025/26, the Personal Savings Allowance is:
Income Tax band
Personal Savings Allowance
Basic rate
£1,000
Higher rate
£500
Additional rate
£0
It applies across your taxable savings income, not separately to each account. Include interest when establishing your tax band: interest itself can affect whether you receive the £1,000 or £500 allowance.
If wages, pensions and other income do not use all your Personal Allowance, the unused amount may cover interest. You may also qualify for the starting rate for savings, up to £5,000 taxed at 0%. With the standard £12,570 Personal Allowance, this starting-rate band reduces by £1 for each £1 of relevant other income above £12,570 and is exhausted at £17,570.
For example, if the Personal Allowance is already fully used and no starting-rate band remains, a basic-rate taxpayer with £1,300 taxable interest would normally pay 20% on £300, giving £60 tax, provided the interest does not move them into a different band.
Savings income uses UK-wide savings rates, including for Scottish taxpayers; Scottish employment and pension income bands should not simply be applied to bank interest.
How does HMRC know about the interest?
Banks and building societies normally report interest after the tax year ends. HMRC uses this alongside other information to calculate tax and may also estimate current-year interest when setting a tax code.
An estimate for the current year is not the same as the actual interest for 2025/26. Check both if balances or interest rates have changed. Do not assume that an account closing, or its balance changing, makes last year’s interest incorrect.
What should you check?
Compare the calculation with annual interest certificates and account records for 6th April 2025 to 5th April 2026. Check:
The total across all accounts, including closed accounts.
Whether an account or interest amount has been duplicated or attributed to the wrong person.
Whether tax-free ISA interest has been included incorrectly.
Your share of joint-account interest. HMRC normally splits it equally; different treatment requires support and can involve special ownership rules, particularly for spouses and civil partners.
Whether receipts are interest, dividends, incentives or another type of income. These are not interchangeable for tax purposes.
Salary, pension, other income, allowances, reliefs and tax already deducted.
Any earlier payment for the same assessment year.
Fixed-term accounts, overseas accounts and unusual ownership arrangements can need specialist advice. Do not allocate fixed-term interest solely according to when you withdraw the cash; check the account terms and the applicable tax treatment.
Payment and challenge deadlines
P800: Follow the collection arrangements in the letter. There is no general rule that every 2025/26 P800 is payable on 31st January 2027. HMRC normally collects eligible underpayments through a future tax code. You can pay voluntarily before collection begins; if coding is unavailable, HMRC will explain how to pay. Contact HMRC promptly if the calculation is wrong.
PA302 for 2025/26: HMRC’s published payment rules are:
Letter received before 31st October 2026: pay by 31st January 2027.
Letter received on or after 31st October 2026: pay within three months of the date of the letter.
Check the deadline and any specific arrangements on your assessment. Use the 14-character payment reference beginning with X, not an unrelated Self Assessment reference.
For a PA302, tell HMRC about incorrect information within 60 days of the assessment date. That is the initial challenge period, not the payment deadline. If you disagree with HMRC’s subsequent decision, follow the appeal instructions and deadline in its decision letter immediately.
A query does not automatically suspend payment. Ask HMRC whether payment has been formally postponed and obtain confirmation; otherwise the payment obligation remains.
What if you cannot pay?
You can make smaller payments towards a Simple Assessment as long as the full amount is paid by the deadline. Paying after that deadline requires an agreed arrangement, such as Time to Pay, rather than an instalment plan you decide on yourself.
Contact HMRC before the due date if you cannot pay. An agreement is not guaranteed and may involve an affordability assessment. Late payment can lead to interest and debt recovery.
When is Self Assessment needed?
If you already complete a Self Assessment return, report taxable savings interest on it, even where the allowance means no tax is payable. Tax-free ISA interest does not normally belong on the return.
HMRC’s current guidance says savings interest above £10,000 in a tax year needs to be reported through Self Assessment. Other income or circumstances can require a return too, including relevant self-employment, property, overseas income or capital gains.
A P800 or PA302 does not cancel a separate notice to file. If you receive a PA302 for a year covered by your Self Assessment return, contact HMRC to resolve the overlap rather than paying the same liability twice or ignoring either document.
If you have tax to pay on savings interest and have not received the expected calculation by 31st March 2027 for 2025/26, contact HMRC. Do not wait for a letter where a separate registration or reporting obligation applies.
Step by Step Procedure
Check that the letter is genuine using GOV.UK or your official tax account. Avoid links in suspicious messages.
Identify whether it is a P800 or PA302, and record the tax year, payment arrangements and any challenge deadline.
Gather interest certificates, statements, P60s, pension details and other relevant income records.
Reconcile the figures, allowances, ownership shares and tax already paid.
Contact HMRC promptly about errors. For a PA302, act within the 60-day challenge period and clarify whether payment is postponed.
Pay correctly by the applicable deadline, or confirm the PAYE coding arrangement. Seek payment support early if needed.
Check any separate Self Assessment obligation and resolve overlapping assessments with HMRC.
Keep the letter, calculations, correspondence and proof of payment. Apply the relevant retention rules if you also have business or Self Assessment records.
Review current-year tax-code estimates so that last year’s interest does not produce an unsuitable forecast for the next year.
Frequently Asked Questions and Answers
Is a P800 the same as a PA302?
No. A P800 is a PAYE reconciliation, often collected through a tax code. A PA302 is a Simple Assessment with its own payment reference, deadline and challenge procedure.
Do I have 60 days to pay a PA302?
No. Sixty days is the initial period for challenging incorrect information. For 2025/26, the payment deadline is normally 31st January 2027 for letters received before 31st October 2026, or three months from the letter date for those received on or after that date.
Does each bank account have its own savings allowance?
No. Your Personal Savings Allowance applies across taxable savings income. ISA interest is normally exempt, and other allowances may also cover some interest.
What if HMRC uses the wrong interest figure?
Compare it with your records, distinguish actual past-year interest from current-year coding estimates, and tell HMRC exactly which amount needs correcting and why. Keep the supporting evidence.
Does a letter mean I do not need a tax return?
Not necessarily. Existing Self Assessment obligations and other reportable income still matter. Resolve any overlap with HMRC and do not ignore a notice to file.
How can 360 Accounts help?
360 Accounts & Bookkeeping can review your letter, reconcile interest to bank evidence, check allowances and tax rates, help resolve errors with HMRC and assess whether Self Assessment is needed. Bring the complete letter and your bank and income records so we can review the full position.