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Tuesday, 7 September 2010 Am I Paying too Much Tax? With all the press coverage about HMRC and the under payments and over payments of PAYE tax, how can you ensure that you are paying the right amount of tax? These tips should help. 1) If you change employers during the year, make sure you give the new employer a copy of your P45 given to you by your last employer. If your tax affairs are simple, i.e. you are a basic rate tax payer and you have no other income, the basic tax code should be 647L for 2010/11, however if you change jobs and do not give the P45, your new employer will use a BR code, which means basic rate and takes tax at 20% without giving you your personal allowance (the annual tax free amount of £6,475) 2) If your tax affairs are more complex because you have multiple employments or other sources of income, you will probably get issued with PAYE coding notices. You need to check the detail of these forms to ensure the assumptions are correct. These assumptions are always based on the previous tax years' information, so if your other income has gone up or down, this might result in you under or over paying tax. 3) If you are paid less than 40p per mile for business travel by your employer, you can make a tax reclaim for the amount under paid. 4) If you are a higher rate tax payer, make sure you are declaring other income such as interest or dividends on a tax return. This is your responsibility to tell HMRC about this income. They will not automatically issue a tax return and therefore you can underpay tax for years without knowing. 5) If you are higher rate tax payer, make sure HMRC are including the detail of pension contributions, employment expenses and charitable donations on your PAYE coding notice as this will reduce the amount of tax you pay. 6) Don't assume your employer or more importantly your payroll department are tax experts. They are not and they usually will have limited tax knowledge other than how to deal with essential payroll matters. 7) Your employer will never receive the detailed information from your PAYE notice as this is confidential information. They simply receive the code from HMRC and do not know if this is correct or not. 8) If you have any changes to your income during the year, ring HMRC and let them know to make sure you are not overpaying tax via PAYE. For a limited number of cases, CCF are checking details to ensure you are not overpaying on the PAYE. Please email enquiries@ccfaccountancy.co.uk for details. This information is based on current tax legislation and can be subject to change following legislative changes. |
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Are you a buy to let property owner? Budget summary for small businesses Don't fall for the 'No Tax Return Needed' Letter! |
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