We have noticed that HMRC has started to get a bit overzealous when it comes to adjusting tax codes for taxpayers with complicated affairs.
They are making adjustments to PAYE tax codes to collect tax in advance on things like dividends or if you are a higher rate taxpayer. Many of these taxpayers already make payments of account against this income and so end up paying advance twice.
It all comes out in the wash, but the cashflow can be quite challenging. It’s therefore important to check your tax code regularly to ensure you’re not paying the tax man a penny more than necessary.
HMRC are usually happy to make changes to a tax code if the taxpayer challenges them (because they know they’re being a bit naughty!). A qualified accountant can help by checking the tax code and making any necessary adjustments.
In addition to checking and adjusting your tax code, it’s also important to understand the tax implications of any changes made. For example, if you are a higher rate taxpayer and your tax code is adjusted to collect tax in advance on income, this may mean that you will have to pay more tax. Again, talking to an accountant will help to shed light on this.
That’s all from me for today. Just remember, checking your tax code regularly is an important step in ensuring that you pay the correct amount of tax!