DON’T TAKE ‘YES’ FOR AN ANSWER!
If you get an unexpected cheque in the post from HM Revenue & Customs –
and more than 3 million people are at the moment – the natural reaction is to
punch the air and shout ‘Yesssssss!’ before heading swiftly to the bank before
the taxman changes his mind.
But before you do, ask yourself ‘is this cheque for the right amount?’ It
has come, remember, from an organisation which gets its sums wrong every year.
The reason you have got the cheque in the first place is because the Revenue has
told your employer or pension payer to take too much tax off your wages or
pension through PAYE in 2010/11. So there is no guarantee that this second go at
the sums has got it right.
You should also have had in the post a form called a P800 which shows how
the refund is worked out. That will show your income from earnings or a pension,
any expenses payments by your employer, and any other benefits your employer
provides. It will also show any amounts you can deduct from your income such as
a pension contribution or expenses you can get tax-free such as membership of a
professional body. It will show your tax allowance. And there may well be a
figure for ‘adjustments’. Check all these amounts carefully. Compare your income
to your P45 or P60 showing what you were paid in the year, and check that your
tax allowance makes sense – they are listed here
http://www.hmrc.gov.uk/rates/it.htm. Remember that if you get a state
pension that will be deducted from the allowance. If any figure is wrong call
the tax office and ask about it. Hopefully the sums will be correct and then you
can bank the cheque knowing it is for the right amount.
By the middle of September all the cheques should have been sent out.
Then comes the bad news. Another million or so people will be getting a demand
for a payment because HMRC told their employer to deduct too little tax from
their pay or pension in 2010/11. If you get such a demand – it will be for at
least £50 and the average is around £550 – check the P800 very carefully to
satisfy yourself that you really owe the money. If you do it will be collected
by taking more tax through PAYE from April 2012.
There is a useful guide to the P800 form and how to check it here
http://www.hmrc.gov.uk/p800/index.htm.
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