Earlier this year HMRC declared that over five million people have had the wrong tax code and thus paid the wrong tax for the previous financial year.
Most of these people have paid too much tax, and are entitled to a tax rebate, but some have paid too little tax, and so will end up paying more tax out of their wages in this tax year.
It can take until October for you to receive any information regarding any tax due to you or owed by you from the HMRC, providing they have your correct contact details. However, you can speed this process along yourself.
Should I check my tax code?
If you have more than one job, or have changed jobs, or if you have taxable benefits from your job such as health cover, then you are more likely to have paid the incorrect amount of tax.
However, even those in ‘straightforward’ employment can be given the wrong tax code, so it is a good idea to check your tax code.
What if I’ve overpaid tax?
If you think you have paid too much tax, you can claim for a repayment, which can be much quicker than waiting for a cheque in the post and reduces the risk of your overpayment never being picked up and repaid to you.
Are there other reasons why I have overpaid tax?
There are lots of reasons why you can over pay tax and not just having a wrong tax code. If you have expenses because of your job you can claim back a tax rebate for the last four tax years.
Examples of job expenses are:
Travel – Using your own car or public transport for work purposes (not normal commuting)
Uniform – Washing your own uniform or protective clothing
Tools – Buying tools for work use
Professional Fees – Paying into a professional body or some unions
What if I’ve underpaid tax?
If you’ve underpaid by less than £3,000, the HMRC will change your tax code for the following year (2014/15) and so you will pay more tax in the future to cover this.
If you’ve underpaid by more than £3,000, you can contact the HMRC to arrange a method of paying this off. Usually, a payment will be made to reduce the amount down to £3,000 and then this is paid off as above. If this isn’t possible, the payment can be spread out over more time.
But it’s not my fault if I’ve underpaid?
Unfortunately, as long as the HMRC contacts you within a 12 month period to inform you of any errors in your tax code, it is within it’s legal right to make you pay any money owed.
