Paying too much tax, or just don't think you should be?

Paying tax is something that none of enjoy doing (or at least I have yet to meet someone who does!), but in certain circumstances you could find yourself paying tax unecessarily, or where you are owed tax back from Her Majesty's Revenue & Customs you've drawn a blank on how to go about it.  Well, here are a few simple tips to help you along the way...

If you have paid tax that you shouldn't have done, perhaps having it deducted from bank interest even though you're a non-taxpayer, or perhaps you're retired, or the income arising belongs to a minor, you don't need to do a self-assessment tax return to reclaim it.  It is possible to fill and file a much simpler repayment claim, called a form R40, which can be found here http://bit.ly/QIn8QI along with full guidance on what to do.

To prevent yourself having to go through this process every year, if the tax issue you have does relate to bank interest (or similar) you can complete a form R85, which can be found here http://bit.ly/NAYUb4 again along with full guidance.  This will stop your bank from deducting the tax in the first place and allow them to pay your interest gross going forward.

If it seems that your having more tax taken out of your earnings or pension than seems right, its worth checking what tax code your employer/pension provider is using.  Firstly does it match up to the one HMRC have sent to you?  If so then check that the code issued by HMRC is correct.  Some guidance about tax codes can be found here http://bit.ly/egCDn.  If something seems amiss, make sure you notify HMRC straight away, and ensure that whoever is deducting tax from your earnings uses the right code going forward.  Provided this is done during the tax year in question then the matter should resolve itself without the need for further action.

Finally, a word of caution.  Possibly you've recently received a tax refund from HMRC, on this I would caution that you treat it warily.  In recent months HMRC have been doing a lot of work to correct the errors made in peoples tax codes (which can affect the amount of tax deducted from your salary, or pension if retired).  What they do not seem to have been doing is marrying that up the taxpayer's self-assessment record.  I have over the last 12 months had clients who have received a tax refund as a result of the tax returns I have completed for them, only to receive a very similar refund from HMRC later in the year.  Eventually HMRC will ask for this back as you've been refunded for the same thing twice, only they'll also ask for interest at a punitive rate.  So always check first before you run off and spend that refund cheque!

This is by no means an exhaustive list of the issues that can arise, but are some of the more common ones that I find clients experiencing.  If you need any assistance, please contact me at HCB Solicitors.