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Tax slip-up on your April payslip?

Published on 15 April 2010

Problems with PAYE Codes for the 2010/11 tax year have been well-publicised, but many may only now realise they have a problem as April payrolls are processed. Those people who do not normally get payslips when they are paid need to take particular care.

Someone once said that nothing in life is certain except death and taxes. This is indeed true inasmuch as you know you will probably have to pay tax, but unfortunately how you pay it is far less certain!

You may well end up with a plethora of ‘coding notices’ from HMRC or – perhaps worse still – no coding notices at all. And, this year, there is a third and further worrying possibility – that you might have received a coding notice but HMRC might not have sent the same code number to your employer or pension provider.

In an earlier article we highlighted the problems with 2010/11 PAYE Codes (for pensioners in particular). Whilst HMRC are working behind the scenes to resolve these problems, it is an ongoing battle and the war is far from won.

The extent of some of the known problems (and perhaps others that have yet to be identified) may only be revealed now, when April payrolls are run applying 2010/11 codes for the first time. This could be because:

  • incorrect codes have been received but not understood by employees and pensioners, and therefore not put right; or
  • new codes have not been issued in cases where there should have been a change; or
  • the individual has received a code but their employer or pension provider has not received one (or not the same one) and therefore deducts an unexpected amount of tax.

So, what should you do?

First, as advised in our earlier article, check the coding notices you have received. If you don’t understand them or think they might be wrong, contact HMRC as soon as you can. If you haven’t received a coding notice for each pension and/or job, again telephone HMRC and ask for one.

Second, once you’ve checked the coding notice and are happy it is correct, check that the same code number is being used by your employer or pension provider. However, many pensioners may be at a disadvantage in doing this as there is an increasing trend by pension companies not to issue regular payslips and only send out a year-end P60. You might therefore need to call them to check what code they are using.

Another option in the absence of a payslip is to check your bank statements to see how much you are paid in April. If there is an unexpected and substantial change from the previous month (other than, say, a small change which might have been expected due to the increase in State pension) this is a good indicator that there has been an error and you will need to contact HMRC to get it resolved. Use the number quoted on your coding notice or call 0845 3000 627.

Trouble getting through to HMRC?

The tax charities dealing with low income people have reported frequent examples of excessive waiting times on the HMRC helplines, together with calls just being cut off. We are taking up this issue with HMRC, but no early resolution is promised.

If eventually tenacity fails you, ‘plan B’ is to write to HMRC complaining that you have been unable to get through to sort out your coding problem.

Make sure you clearly head the letter ‘COMPLAINT’ which should mean it gets looked at sooner rather than later. But we suggest you only use this as a last resort because, however frustrating it might seem at the time, your coding problem should ultimately be sorted out sooner if you wait in the queue to speak to someone.

After you have sorted out the problem, you can still complain about poor service and request reimbursement of your exceptional costs and/or a consolatory payment if you have been subject to particular stress and worry.

HMRC have published a Charter which explains what you can reasonably expect from them by way of good service, which you may wish to quote if you feel that they have not met their promises.

Further help for people on low incomes

If after all your efforts you still need help and cannot afford to pay an adviser then there two excellent charities which provide a professional and free service:

TaxHelp for Older People (TOP) can provide free tax advice for the over 60s with a household income of less than £17,000 per year. Their helpline number is 01308 488066.

TaxAid provides free tax advice for people on similar income levels to TOP but for a wider spectrum of taxpayers. Their advice service is explained on their website.

(15-04-2010)

Contact: Kelly Sizer (Tel: 0844 579 6700; Fax 0844 579 6701)

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