Whether you are working or receiving a pension, it can be all too easy to have more tax deducted than due. At Continuum, we want to explain how you can tell, and what you can do to get things put right.
Why would the taxman take too much?
You might have paid too much tax if:
- You started a new job and had an emergency tax code
- If you changed from full to part time working
- If you had more than one job at a time
- Or simply because your employer made a mistake with your tax code.
In the same way, a pension provider might use the wrong tax code, or you could run into problems if you had more than one pension, or if someone made a mistake when you took a pension lump sum.
Of course, HMRC has checks in place which should spot these kinds of mistakes. Your employer or pension provider will give them details of how much income you have received and how much tax you have paid. They will carry out an automatic reconciliation at the end of each tax year, and if they think you have not paid the right amount of tax, they send you a P800 tax calculation or a Simple Assessment between June and October following the end of the tax year.
You need to check your P800 tax calculation carefully. It could bring you a tax rebate if you spot an overpayment.
Paying too much this year
If you think you are overpaying tax through PAYE in the current tax year, you probably have the wrong tax code. You should tell HMRC why you think you have paid too much before the end of the tax year. You can do this online if you have set up a Personal Tax Account, or you can telephone the HMRC helpline.
You can also write to HMRC. Be sure to mark the top of your letter clearly with ‘repayment claim’ so that HMRC can make sure it gets to the right department.
You will need to include your personal details, such as your full name, address, date of birth and National Insurance number and details of your employers or pension providers. You should also have details of why you think your code is wrong. HMRC may already have everything they need to check, but they may ask you for more information.
Once HMRC have your claim, if they see that you are right, they will issue you with a new tax code. This will result in a lower tax deduction or a tax refund through PAYE, meaning any refund will be added to your wages or pension and the amount will be paid automatically through the payroll.
Earlier years’ repayments
If you do find something wrong, it might be also be worth checking whether you are due anything back for previous years. The same mistake may have been repeated. Repayment claims have time limits, so you should not delay, but be aware. If it turns out that you have not paid enough tax in previous years, HMRC will thank you for telling them, and collect it from you.
If the repayment is due towards the end of the tax year and you have already received your final pay or pension for that year, you may have to claim a refund directly from HMRC once the tax year has ended or wait for the P800 process to happen.
Getting some help
Of course, all this can be rather daunting if you are unfamiliar with the processes involved, and it can help if you have an expert on your side. At Continuum we can help you review your tax position and take you through the steps if you are paying too much tax. But we don’t stop there. Depending upon your financial circumstances, we may even be able to help you cut your tax bill for the future even if the taxman’s calculations are correct.
To find out more about how we can help you with your tax, simply call us.
The information contained in this article is based on Continuum’s understanding of current Tax rules and does not constitute any tax advice or a recommendation to suitable investment strategy, you should seek independent financial advice before embarking on any course of action.
Levels and basis of reliefs from taxation are subject to change and depend upon your personal circumstances.
The Financial Conduct Authority does not regulate taxation advice.
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