Taxpayers could be paying too much due to outdated savings income figures

The Low Incomes Tax Reform Group (LITRG) is advising taxpayers to check the accuracy of the savings income figures shown in their HMRC PAYE Notices of Coding and tax calculations (P800 forms), as many are paying are too much tax.

LITRG senior technical manager Kelly Sizer said: ““A number of taxpayers have contacted us recently having noticed that their PAYE codes for the current tax year, and tax calculations for previous tax years, have included out-of-date savings income figures. The majority are paying too much tax as a result.”

However, while some may be paying too much tax, the group also warned that outdated savings information can mean that some people are not paying enough tax and might face a later tax bill.

HM Revenue & Customs (HMRC) issue employees and pensioners with tax codes that contain estimates for other sources of income. This is often done so that the taxpayer does not need to complete a tax return; instead, any tax due on other sources of income is collected through PAYE.

However, if the revenue fails to update the estimates for actual figures after the end of the tax year, or if they simply carry forward an earlier year’s figure to later years, the taxpayer could end up paying the incorrect amount of tax.

Sizer added: “HMRC receive information from banks and other financial institutions after the end of the tax year, but this might not always be entirely accurate or complete. It is the taxpayer’s responsibility to advise HMRC of accurate figures.

“People might pay too much tax where their savings income has gone down as compared to earlier years. For example, pensioners who are supplementing their income with savings may be earning less interest year on year as a result.”

LITRG is urging taxpayers to check their Notices of Coding and any tax calculations (P800 forms) they receive from HMRC to ensure they are paying the correct amount of tax. They may be due a refund and can currently claim refunds for any tax year from 2015/16 onwards.

The group also highlighted that if a taxpayer is due to pay more tax, it is best to have the calculation corrected now.

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