Income tax cuts could save taxpayers billions claims expert
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HMRC will deal with a number of tax-related matters, but one people usually look out for is a tax rebate. If a person is unemployed or in receipt of a pension, then they might be paying too much tax. Employers and pension providers will use a person’s tax code to work out how much tax to take from them.
However, sometimes they might get this wrong, resulting in an overpayment of tax.
This could happen, for example, if a person had a pay cut HMRC was not aware of, and thus a tax code was not adjusted accordingly.
When the financial year comes to an end in April, HMRC will conduct a review of Pay As You Earn (PAYE) records.
This will flag if a person has overpaid on tax, and thus, individuals should automatically receive a refund – sometimes known as a rebate.
If this happens, then HMRC sends out what is known as a P800 form or Simple Assessment tax calculation.
These documents can help Britons understand if they could be set for a refund and how to claim it.
People will only get a P800 once the tax year has ended, but it usually arrives before the end of September.
Individuals can definitely expect to receive correspondence by November if this is applicable.
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As such, individuals may wish to keep an eye out for the letter arriving through the post.
Individuals may have paid too much tax in certain circumstances.
These can include:
- Starting a new job and being placed on an emergency tax code
- An employer using the wrong tax code
- A person having more than one job simultaneously
- A person’s circumstances changing – losing a job, changing from full-time to part time work, stopping working
The letter will provide details on the income a person should have paid tax on.
This will include income from pay, pensions, state benefits, savings interest and employee benefits.
Individuals will then need to compare the figures with their own records, for example, bank statements, or a P60.
However, the P800 letter can not only bring good news about a refund, but also news about underpayments.
Certain individuals may have underpaid tax in the year for similar reasons, and thus will be required to pay sums back.
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If a P800 says a person owes tax, then HMRC will usually collect this in instalments over the next year.
This occurs automatically if:
- A person pays Income Tax through an employer or pension provider
- A person earns income over their Personal Allowance to cover the underpayment
- A person owes less than £3,000
If none of these apply, then HMRC will write to an individual to let them know how they can pay.
This can be done via post by cheque, for example, but Britons should allow three working days for their payment to reach HMRC.
A P800 could tell individuals they may be able to pay any tax they owe online.
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