Wednesday, 27 January 2010

Had a dodgy tax code?

The way that the income tax system works is a mystery to most people. At this time of year some people are desperately trying to get their tax affairs in order to meet the 31st January deadline for submitting their tax return.

But many more face confusion according to reports on the BBC which suggests that following the introduction of a new computer system (sounds familiar..) some people may be getting the wrong income tax codes in the post. If these errors are not corrected, they may end up paying too much money in the new tax year which starts in April.

The problem seems to affect those who have changed jobs or who have had more than one job. Each year you are allowed to earn £6475 without paying any tax. Where you have more than one job, that tax allowance is sometimes split between your jobs so that each employer gives you a tax free amount and then you pay tax on the rest. The problem seems to be that the Inland Revenue are in some cases splitting the tax code for 2010/11 between employers even if you no longer work for them! As a result you could end up paying too much tax.

If anyone who lives in the Northavon constituency receives a notice of coding that they don't understand or which looks wrong they are welcome to e-mail me or post me a copy and I will be happy to take up their concerns with HMRC.