We are in a new tax year and that means there’s plenty to be done to make sure you do not pay too much tax. Errors can and do occur and nobody seems to have simple tax affairs these days.
If you think you’ve paid too much or too little tax you should contact HM Revenue and Customs. You can telephone 0300 200 3300. This is a special tax line. Or you can write to HM Revenue and Customs, PAYE, PO Box 1970, Liverpool L75 1WX.
Be very careful when seeking out tax information online. There’s lots of useful information out there but there are also lots of villains trying to part us from our money under the guise of helping us to get refunds and looking remarkably like official government websites. Only use a website that has gov.uk in its email address.
There are even stands at railway stations offering you help with your taxes. They charge lots of money for a service you can get for free from HMRC.gov.uk
Squaring up to the big guy
Some people fall foul of the Revenue because the tax man reckons they’ve not declared all their income.
This can be a nightmare. HMRC will often play their cards very close to their chest and not say what exactly they think you’ve not declared. They make a demand and then expect you to sort it out. The cynical among us might be tempted to thinks the aim is to spook us into feeling guilty and admitting something, even if it’s something completely different to the tax anomaly that originally caught there eye.
We even came across a case where a small amount of money from a Co-Op divi somehow got flagged on the stax ystem as a possible account full of undeclared savings. Because the Revenue wouldn’t reveal details it took ages for the poor person being pursued to figure out what the issue was. Sometimes it can take years of grief to sort things out and not all of us the keep orderly paperwork necessary to do this quickly and efficiently (you know who you are).
Sometimes a tax bill comes out of the blue long after the money was earned. If you’ve declared all your income and kept HMRC fully informed and a bill arrives when you can least afford it – because you’ve retired or are in reduced circumstances – you might be able to get the money waived by using extra statutory concession A19.
But HMRC has become much more hard-nosed about this, so you must be able to demonstrate that they had all the information back at the time and that paying now would cause you real hardship.
If you have paid too much over the years you can claim back up to four years and get some tax-free interest into the bargain. But it’s much better if you spend a little time making sure that you are paying the right amount of tax and are using your full personal allowances as you go along.
If you receive a self-assessment return from HMRC you’re legally obliged to complete and submit it, either by post or by filing a tax return online. If you want to use the paper form it has to be submitted by the end of October this and if you opt for an online form you have to fill it in by by the following January 31 and pay any tax due by then, or you will be fined £100 right off the bat .
Savings have become very confusing with tax-free products and ordinary accounts that charge tax even if you are a non-taxpayer. If you earn less than £10,000 you have to tell your bank or building society and fill out a R85 form. This will enable them to pay your interest without deduction of tax.
If your earnings or pension income are low and you have savings that take you a couple of thousand pounds over the tax free personal allowance then you can apply to get half the tax back. In this tax year if your total earnings including savings interest is £12,880 then the interest is taxed at 10% instead of the 20% on other income.
You can get a refund of overpaid tax using a R40 form downloadable from HMRC.gov.uk. In the next tax year savers will be able to earn £5,000 in interest over the personal allowance without paying any tax.
- Couples with unequal incomes can save tax on their savings by putting them in the non-earner or standard rate taxpayer’s name. But you have to trust your partner.
- ISAs are savings accounts that are totally tax-free and the amount that can be invested per tax year will increase to £15,000 in July. It is currently £11,880, half of which can go into a cash savings account.
Win a copy of Money Fight Club
Enter our simple competition and win a copy of the book. We have 5 copies of Money Fight Club to give a way. To win, simply tell us your top tip for keeping your tax affairs in order (no personal details please).
- Email firstname.lastname@example.org
- Put BOOK COMPETITION in the Subject line.
- Include your full name and postal address so we can rush the book to you if you win.
5 entries will be chosen at random after the closing date of 12 midnight (UK time) Thursday, April 24.