Tax Underpayment: What If I Haven't Paid Enough Tax
22nd March 2016
Paying the right amount of tax isn't always about calculating expenses and claiming refunds. From time to time, you might find HMRC calling round with their hand out for more. It's not much fun when it happens, but it needn't be a disaster either.
How Could I Have Underpaid My Tax?
Sometimes, it's the taxman himself who's made the mistake. If you've got more than one job, for example, it's possible that you've been given your Personal Allowance for both. That would mean that the first £10,600 (or £11,000 for the next tax year) that you made for each job was untaxed, rather than just for your "main" one.
Maybe you received some state benefits you didn't qualify for and HMRC wants them back. The government reckons that about 15% of PAYE taxpayers are charged either too much or too little. These situations shouldn't crop up often, but they need sorting out quickly when they do. If you have more than one job then check your tax code has been assigned correctly.
If I Underpaid Tax Will I Have To Pay It Back?
Sometimes, the amounts they're talking about are too small to lose sleep over. In fact, if you've underpaid by £50 or less, they're supposed to just write it off. Up to £2,999, they'll probably change your tax code for the next year to claw the cash back. That can be painful if you're not expecting it - especially if it's their mistake.
If you owe over £3,000, they'll ask for it to be paid directly, and tell you to submit a tax return if you don't cough up fast. It can be a weird experience to receive a demand for a Self Assessment tax return if you're on PAYE. Many people assume that if you are employed (PAYE) then what you get in your wages is always all correct. In fact, many people on PAYE are due a tax refund for travel and expenses that their employers have not reimbursed - it's always worth double checking.
What Should I Do If I Get A Demand For Unpaid Tax From HMRC?
The mistake some people make is just to ignore it, thinking that it doesn't apply to them. Don't do that. Seriously, just don't. If you get a tax calculation from HMRC and they ask for a tax return, they probably think you've got some serious untaxed income.
You're actually better off nipping things in the bud before they even get to this stage. As soon as you see your calculation is higher than the tax you've paid, get in touch with RIFT so we can sort the problem out fast. Waiting until they ask for a tax return could mean more headaches, and possible fines if you don't file or pay in time.
What If I Have A Demand For Unpaid Tax and I Don't Owe Anything?
Of course, the taxman demanding more money from you doesn't necessarily mean you actually owe him anything. It's really important to work out exactly why they think you've underpaid, and to set them straight if they're in the wrong. Again, the wheels may not turn as fast as you'd like, so it's best to jump on this as soon as you spot there's a problem.
Unexpected tax demands can be a shock to the system, but there are ways of keeping safe. As always, the best advice is to get the best advice - and that means RIFT. If you've ever claimed a refund through us, you already know how much we can help. What you might not know is how much else we can do for you. Whatever tax worries or problems you have, be sure to get in touch.
Whether you're in the red or the black, you can always bet on RIFT.