Learn About Important Tax Checks

by Lucy Daniel
(hmrcguide.co.uk)


Knowing what to pay or not to pay will ensure you don't end up paying too much or too little Income Tax.

The HMRC (HM Revenue & Customs) UK tax authority has an efficient and fair tax system that you can use to calculate how much tax you owe.

Tax paid will vary depending on whether you are an employee, have money saved in a bank or building society, or whether you are self-employed.

If you're an employee or if you're on company pension, your employer uses your tax code to determine how much tax you should pay.

Your tax code should be printed on your payslip, your PAYE Coding Notice, your P60, or your P45 form.

The PAYE Coding Notice is often issued a couple of months before the tax year but your employer may issue you with one if something has changed.

The P60 form is issued at the end of the tax year while the P45 form will be given to you when you leave a job.

If you have more than one job, be sure to check if the different numbers and letters that make up your tax code are right.

Contact the HMRC tax helpline on 0300 200 3200 as soon as possible if your tax code is wrong.

If you have money saved in a bank or building society, tax will be taken off any interest you receive.

The tax will be taken before you receive the interest so it is important to find out whether you are paying taxes or getting tax-free interest.

Tax free interest is only awarded to people whose taxable income is less than their tax-free Personal allowance.

If this is the case, you can apply for tax-free savings interest or claim back any tax you have previously paid.

This service is also offered to people receiving Blind Person's Allowances.

If you're self-employed, you can find out how much you owe by filling in a Self-Assessment tax return form online or by sending HMRC a paper return by post.

If you fill in your form online, HMRC will immediately tell you how much you owe or how much tax you are owed back.

If you however decide to fill in a paper return, be sure to send it before 31 October or you'll have to pay a fine for sending it in late.

HMRC sends all self-employed people a Statement of Account demanding payment just before your tax is due.

You will have to pay all previous due taxes even if you haven't had a statement yet.

To avoid paying the wrong tax, tell HMRC of any changes that may affect your taxes that is: if you start receiving a second income, stop being self-employed, start getting State Pension, get married, or start getting company benefits.

If you change address, it's important to let them know as the Data Protection Act prevents your employer from passing on your new address to the HMRC.

You can use the quick Income Tax Check Calculator on the HMRC website to help you calculate the amount of tax you owe the government.

This is however only an estimate as you may have other types of benefits, allowances, or income that might not be reflected on the calculator.

Author Bio: The guest post was contributed by Lucy Daniel, financial guest blogger from Manchester, UK.

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