BBC News are carrying a story this morning about “Millions in line for tax rebates” – apparently, “About six million people are set to receive tax rebates averaging £400, while another million will learn they have underpaid their tax by about £600.”
So, whats this about then?
Well, first of all, most of our clients won’t be effected – although your family and friends might – a reconciliation like this only applies to taxpayers not submitting a Self Assessment return each year – those deemed to have less complex affairs.
Secondly, the six million and million numbers are probably a stab in the dark.
So why to underpayments and overpayments occur? Its a function of the PAYE system, which works well when things are simple, less well when they are not, which is why, by preference, I’d rather have clients inside Self Assessment, where a return is done each year and everything checked over, than outside and haphazard.
Complexities, where PAYE fails, include people with:
~ two or more jobs
~ state pension and a job or other pension
~ two or more private pensions
~ company cars and other benefits
~ untaxed income like lettings
If you are the recipient of a underpayment notice, and would like it checked – even if its correct you may be able to appeal under ESC A19 (HMRC delays in using information) – then most accountants or tax advisers can do this for you.
If you are the recipient of a overpayment notice, then celebrate! But think about getting your taxes checked in case.