It’s not part of Franklin’s famous ‘two certainties in life’ saying, but many of us will end up paying more tax than we should due to a wrong tax code. However, unlike mortality and tax itself, your code and tax refund situation can be resolved, but only if you take action.
Sadly, we often do little to help ourselves. How many of us could confidently recite our tax code, or would even know how to find it? Do any of us thoroughly check our wage slip or know our personal tax allowance? The majority of British employees put their trust into the accounts department of the company they work for, but this could be leaving us all heavily out of pocket.
Plenty of par-for-the-course life events can impact our tax code, from getting married to taking a sabbatical, being unemployed for a length of time or having children. All these things can change our personal tax allowances or the benefits we are entitled to, but most of us will have never considered doing anything other than letting our workplace deduce the amount of tax we are apparently meant to pay.
The reality is that our tax codes are supplied to our employers by HMRC itself and if it’s wrong, your employer can’t do anything about it, and you’re due to a tax refund. The responsibility for your tax code being correct lies with you and only you, whether you’ve overpaid or underpaid. HMRC sends out new tax codes at least once a year, but sometimes more often, so the chances of people being on the wrong code is high.
Figures released earlier this year showed that some 3 million people, both PAYE employees and self-assessment candidates, may have paid too much tax last year after job cuts at HMRC saw telephone waiting times triple to 47 minutes. The remaining staff was overwhelmed by a large number of callers in the days before the tax return deadline and many frustrated callers were unable to speak to an advisor before the deadline passed. The end result? Potentially millions of out of pocket workers.
Commenting after the figures were released, chairman of the Public Accounts Committee MP Meg Hillier said that it is wrong to expect taxpayers to pay a penalty for a late or incorrect tax submission if they were unable to access the information they needed to submit it properly.
She said: “The fact they are hanging on the phone waiting is not good enough. Most taxpayers just want to pay the tax they owe on time, without question. If they can’t get access to the right advice they are the ones who pay the penalty not HMRC.”
Between finance departments, HMRC and job cuts, there’s no shortage of things to blame for paying an incorrect amount of tax. However, when it comes to fixing your tax code, the responsibility lies squarely with you. You may not have to put in the hard yards yourself, but the process of getting your money back has to start with you.
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