HMRC has confirmed that 5.5 million people paid the wrong tax last financial year. It is thought that approximately 3.5 million of these have overpaid and so will be entitled to a tax rebate; the other 2 million, however, have underpaid tax and will be chased by HMRC to pay what they owe.
Tax Rebates
If you are employed and pay tax through the PAYE system you can often claim back tax relief on expenses suffered because of your job. It is worth knowing that you can claim a tax rebate for expenses like washing your own uniform, paying for professional fees, using your own car for work purposes and buying tools. A tax rebate can be claimed back for the last four tax years.
HMRC
The Tax Office is sometimes criticised for having an over complicated tax system which leads to so many errors. HMRC retaliated to critics this year though by emphasising that 85% of tax payers have paid the correct amount of tax.
Who Does It Effect?
The tax payers who are the most common culprits for paying the incorrect amount of tax are those classed as having complicated tax affairs. Some of the people who fall into this category are those who have changed jobs within the tax year, those who have more than one source of income and those who receive taxable company benefits.
When Will I Find Out?
Anyone who is employed and has tax deducted at the source by their employer, should hear from HMRC automatically if they have paid the wrong tax. They will receive a letter from the tax office between now and October telling them that they have either underpaid or overpaid tax.
If You Are Owed
For those who have overpaid tax a cheque for the amount they are due in a rebate should arrive within a couple of weeks of the initial letter. Those who have underpaid however will be advised in the letter as to how much is owed and how it will be collected.
If You Owe HMRC
Typically, if less than £3,000 is owed, the amount will be collected gradually via the tax payer’s pay packet during the 2014/15 tax year by an adjustment in their tax code. If the underpayment of tax is over £3,000, the tax payer will be given the option of making an initial payment to bring the bill down to £3,000 so the remaining tax can then be collected via their pay packet.
