We can all make errors when it comes to working out our taxes. Here are some common overlooked tax issues:
1. Not checking your tax code
Your tax code is important, and tells your employer or pension company how much money you are entitled to be paid tax free – tax will be deducted from the rest. Now and then you may receive a letter from your tax office explaining how your tax code has been worked out.
If you’re unsure of anything, such as whether or not you’re getting the right allowances, do not hesitate to query it.
2. Paying unnecessary tax
Income tax of 20 per cent is deducted from the interest on your savings account at your bank or building society before it comes to you. If the collective sum of your income – including earnings, pension and interest – is less than any allowances you receive, you can fill in an R85 form from your bank or building society in order to waive any tax from being deducted from your interest.
3. Not informing HMRC of a change in working hours
If you change the hours you work, you must inform HMRC, as they may need to change your tax code. This especially applies if you have a job and a pension, as you’ll have a code for each income source, and it is common to end up paying the wrong amount of tax.
4. Unclaimed overpaid tax
If for some reason you’ve paid too much tax, for instance if too much tax has been taken from your income, or you’ve failed to claim tax relief or an allowance, you can claim this tax back within four years of that tax year, using an R40 form.
5. Forgetting to tell HMRC about your approaching retirement
It’s a good idea to inform HMRC when you are soon to retire, so that they can get your tax code sorted out.
Bio: Chip is an enthusiast about all thinks accounting and tax. He Enjoys reading writing and sharing tips on errors and issues within accounting services. Chip works on behalf of Carpenter Box Accountants who specialise in tax, auditing and business services.