Here’s what PAYE taxpayers should consider for HMRC tax calculations

With the Government under intense pressure to save money and receive all the tax that it is owed PAYE taxpayers need to be more vigilant than ever before, said the leading tax and advisory firm Blick Rothenberg.

Robert Salter, a director at the firm said: ‘HMRC is now preparing its annual tax reviews, and it is essential that taxpayers check their 2019–2020 HMRC reviews closely. This is an annual process of reviewing the tax and income records for those taxpayer’s subject to PAYE (e.g., on salary) who aren’t required to complete a formal tax return each year.’

He added: ‘Experience shows that information is often missing in the HMRC calculations and the refunds or liabilities which the revenue initially assess can be wrong. People need to check what they are being asked to pay or what refunds they are getting and not paying the revenue that they owe can result in fines and interest payments.

‘The reviews, which are prepared by HMRC each year without any direct involvement with the relevant taxpayers, are designed to ensure that those individuals who aren’t required to complete a formal tax return because they have limited investment income and aren’t self-employed, receive refunds or pay additional taxes.’

Salter highlighted a number of points that taxpayers should consider when checking their HMRC tax calculations.  Among the issues that taxpayers should review closely are:

  • HMRC calculation on all employment-related income (e.g., salaries, pensions, benefits in kind) and the correct PAYE.
  • Non-employment income (e.g., bank interest, dividends) which are below the threshold to register for the full self-assessment tax return system.
  • Tax relief available for any costs which the taxpayer has personally incurred undertaking their job and which are tax deductible (e.g., professional subscriptions or genuine business travel expenses which have not been reimbursed by the employer).
  • Additional higher rate tax relief available for taxpayer pension contributions and gift aid payments.
  • Any allowable marriage allowance relief and treatment of child benefit.

Robert added: ‘People who spot errors in their personal tax reconciliations will need to discuss them with the Revenue directly, though those with online personal tax accounts with HMRC should be able to notify the Revenue via these accounts. In addition, anybody who is entitled to a tax refund and wants to receive their refund electronically, rather than via cheque, should notify HMRC of this preference.

‘Again, using the personal tax account process is generally better than trying to call HMRC to refund arrangements.The HMRC tax reviews are primarily relevant for employees with employment earnings, those with pensions income and annuities also benefit from these tax reviews and should also ensure that their paperwork is correct.’

Salter added that: ‘Those taxpayers who have underpaid tax will usually have the tax collected via an adjustment to their ongoing PAYE tax coding. This helps ensure that any underpaid tax is reclaimed gradually over a number of months rather than having to be paid off in one lump sum.’


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