Five steps to help tackle the taxman
1. TAX CODE
If you think your tax code is wrong, find your tax reference and national insurance number on a payslip, HMRC letter, certificate of tax paid or PAYE coding notice and contact HMRC as soon as possible.
2. HMRC CHARTER
Quote HMRC’s charter, which can be found on its website, hmrc.gov.uk/ charter. The charter vows to respect taxpayers and act professionally in dealing with them.
3. TAX CALCULATIONS
If you have underpaid tax but are struggling to understand the calculations involved, visit the Low Income Tax Reform Group (LITRG) website at litrg.org.uk and click on PAYE underpayments 2010/2011 for helpful information.
4. CHALLENGE THE NUMBERS
If you think that your tax has been miscalculated and that you have not underpaid, write to HMRC as quickly as possible, ideally within 30 days. Sample letters can be found on the LITRG website.
5. HIRE HELP
If your negotiations with the taxman are failing, you might consider hiring an accountant to deal with HMRC on your behalf. Alternatively, you could request an internal review from HMRC and, subsequently, a firsttier tribunal if no satisfactory conclusion is reached. For more information, visit hmrc.gov.uk/complaints-appeals/how-to-appeal/direct-tax.htm
Used by an employer or pension provider to calculate the amount of tax to deduct from pay or pension. A tax code is usually made up of several numbers followed by a letter. If you replace the letter in your tax code with ‘9’ you will get the total amount of income you can earn in a year before paying tax, for example 747L would mean a person could earn up to £7,479 before paying tax. The wrong tax code could mean a person ends up paying too much or too little tax.
A scheme originally established in 1944 to provide protection against sickness and unemployment as well as helping fund the National Health Service (NHS) and state benefits. NI contributions are compulsory and based on a person’s earnings above a certain threshold. There are several classes of NI, but which one an individual pays depends on whether they are employed, self-employed, unemployed or an employer. Payment of Class 1 contributions by employees gives them entitlement to the basic state pension, the additional state pension, jobseeker’s allowance, employment and support allowance, maternity allowance and bereavement benefits. From April 2016, to qualify for the full state pension, individuals will need 35 years’ of NI contributions.