Tax foul-up: what to do? A blunder by HM Revenue & Customs could mean millions of us have been paying the wrong tax.
You could be facing an extra tax bill of more than £1,400 it emerged this weekend, after the government revealed up to six million Britons have been paying the wrong tax. While 1.4 million people will have to pay more to make up for an error by HM Revenue & Customs, some 4.3 million other Brits will get extra cash, with an average tax rebate of £418 coming their way. But how has an error on this scale come about, will it affect you and what should you do about it? Check to see if you're paying the right tax What's happened? Britons pay tax based on what they earn, either from their employer or from their savings or pensions. This tax is generally deducted automatically from the source of the income, in most cases that means your employer. However, the system put in place to take money from your pay cheque and give it to the Treasury - Pay As You Earn or PAYE - wasn't designed for the modern world. It was built in 1944, a time when there was very little unemployment and the idea of a 'job for life' was common. These days millions of people swap jobs, have second jobs, work part time and more. The system hasn't coped and in many cases has miscalculated what people should be paying.
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I have an ad hoc second job 2 days a week which I have to pay basic rate on all that is earned. This worked okay for a few weeks then the a tax code was applied to the earnings. thankfully at a Wk1 + Tax code. Phoned the agency to ask why they were applying a tax code and was informed that the HMRC sent a coding and they had to apply it even though I filled in a form telling them this was a second job and tax should be at BR. Telephoned the tax office to get in changed which it was but by the time it got through the system had 2 more weeks pay with a tax allowance applied. Since then I have not done any more work for the agency so either I have to pay more to the HMRC at the end of the tax year or if I do any more odd days for the same agency it may take 2 days earning just to pay the back tax. This has happen in the last 2 months.