PAYE code – Is yours correct?
Many people assume that their PAYE code is correct, or that their tax will be automatically adjusted at the end of the tax year once year end submissions are done. Well neither of these are necessarily true.
If we start with paying the right tax – if you stop employment part way through the year, chances are you will have paid too much tax. This tax doesn’t get refunded unless you complete a Tax Return or make a claim. Your tax doesn’t get checked just because your employer submits an end of year form to HMRC. If you stop employment and become self-employed you should be ok, because you should be completing a tax return for that year. But if you have a break and don’t start your new business until the next tax year you could be missing out on a refund.
What about that PAYE code being correct? Well I have a client who is having loads of trouble with his, HMRC seem to change it randomly without paying attention to all the facts, and despite some lengthy conversations with them. Here is an extract which gives an insight into one such conversation as a bit of light entertainment, though it does have the serious side of highlighting an unwillingness to change a broken system:
“It’s because of the expenses you entered on your tax return you just submitted”
I didn’t enter any information about expenses….
“It’s because of the saving income on your tax return”
I didn’t enter any information about any savings income.
“Err……”
Wait…..
“Its because you entered a dividend amount so you are charged income tax at the higher rate”
The tax calculation shows I owe 0 tax so why have you changed my tax code which means I owe.
“It’s not only made up of that though”
Ahhh, so you mean its changed incorrectly because you just received a P11D?
“No, it’s because of what you entered on your tax return”
The tax calculation shows I owe 0 tax so why have you changed my tax code which means I owe.
“It’s not only made up of that though”
Ahhh, so you mean its changed incorrectly because you just received a P11D?
“No, it’s because of what you entered on your tax return”
The tax calculation shows I owe 0 tax so why have you changed my tax code which means I owe.
“errrrr…….”
“OK – I’ll change it.”
Thanks – can you also stop this happening again?
“No there’s nothing I can do”
Yes there is, you can raise it to your management and say that people who submit correct P11D’s and S336’s are having their codes incorrectly modified which means they have to call in and it is just wasting everyone’s time..
…silence…..
Hello
“Yes”
I am not blaming you for this, you are operating in a system and it’s the system that’s broken, and you cannot fix the broken system so you need to raise it to someone who has responsibility for that – ie. Management.
…silence…
“OK I’ll do that”
No you won’t will you.
….chuckle….
“OK – I’ll fix your tax code.”
Thanks.