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HMRC Tax Code Proposal

More powers proposed for HMRC – 30 days to tell you of a change to your tax code

Having an incorrect tax code can mean you either pay too much tax or too little – so it’s important.

Under current regulations HMRC tells taxpayers about any change to their tax code immediately, therefore personal finances can be budgeted accordingly. HMRC are proposing additional powers which would mean they would have 30 days to inform you of a change to your code. T

he difference this could make to ‘take home’ pay could easily derail any worker’s budget and also means that it could take a month to check that the newly assigned tax code is correct. As over 5 million workers are currently dealing with errors in the P.A.Y.E. system, a further consequence may be one of trying to rectify subsequent over or under payment issues.

As reported in The Telegraph, tax experts Baker Tilly said that taxpayers would be “effectively lending to the taxman out of their salaries”.

Parliament will make a decision on this proposal later this year. They have already granted HMRC the additional ability to take money directly from taxpayers’ bank accounts.

According to their spokesman, “HMRC anticipates savings for the taxpayer of several millions of pounds in printing and postage costs, as a result of these changes”. They also said that this new power to withhold tax code information is only designed to be used around busy times of the year, such as around the deadline for self assessment. They justified it further by saying that employees can request their tax code earlier for their own financial planning and that employers will still be informed of any changes straightaway.

Tony Shanks

Chef Tax Rebate

If your a chef or kitchen staff you could be due a tax rebate

As an employee you are entitled to reclaim tax on expenses that are a necessary part of your employment. The catering industry has several costs for which you could be claiming your tax rebate. It means you can get a tax rebate for the last four years and save money in the future with a new tax code.

Do you wash your own chef whites?

If you have to wear a uniform or specialist clothing for work, you can claim a tax allowance for the cleaning of these garments. So, if you wash your aprons or chef’s whites at home you are entitled to this rebate.

Have you had to buy your own protective clothing or shoes?

You can also claim a tax rebate on the purchase of your chef’s whites or aprons if they have not been provided for by your employer. To comply with Health and Safety policies in kitchens, staff are often required to wear non-slip safety footwear. If you have been left to carry this cost yourself, then you can reclaim tax relief .

Buying knives and other kitchen equipment 

Needing to buy knives is standard stuff for a lot of chefs. Knives and other kitchen equipment are essential tools in letting you carry out your professional duties. If you’ve bought them yourself and not been reimbursed a tax rebate can be reclaimed. The amount you can get back is roughly either 20% or 40% ( depending on how much you earn ) of what you have spent.

How do I claim my chef’s tax rebate?

We specialise in getting tax relief back for Chef’s and kitchen staff and can he. Claiming can be time consuming and complicated. We make it easy and hassle free.

Click here to start your chef tax rebate claim today 

Tony Shanks

 

 

Taxpayers being held responsible for HMRC mistakes

HMRC send out millions of tax codes which apply to the system of PAYE automatic taxation. This means that tax should have been automatically deducted from your pension or salary. Mistakes are often made, particularly when a taxpayer has more than one source of income or a change in employment circumstances. The wrong tax code can mean underpayment of tax and the potential for a devastating bill from the tax office. In some cases a tax rebate could be due if you have paid too much.

The tax office may take years to discover a mistake of this nature and will then demand payment to be made within three weeks. This is an immediate and frightening shift of responsibility onto the taxpayer who had initially provided all the necessary information and was unaware that they had the wrong tax code. How many of us have access to a few hundred, or a few thousand, pounds at such short notice?

For example, Jessica Gorst-Williams of The Daily Telegraph took on the case of Peter Patton who received a bill for £10,459 pounds from HMRC in 2009. This bill had accumulated over six years as a result of HMRC applying the wrong tax codes to his combined income of a final salary pension and current work for a disabled care provider. Mr Patton had retired in 1999 from the civil service and paid his bill in full. In 2010 he read an article in the Daily Telegraph about a clause in tax rules which states how he could have his tax arrears written off. His subsequent complaint was denied and may only have received justice, and a refund, after his case was spotlighted by the Telegraph journalist.

‘Escape Clause’ not being used by HMRC to resolve their mistakes

There is a clause called ‘Extra-Statutory Concession’ – ‘Esc A19’ – which sets out three conditions which, if met, allow tax arrears to be written off. These are;

  1. HMRC failed to make “proper and timely” use of the information provided to it.
  2. The tax payer “could reasonably have believed their tax affairs were in order”.
  3. No notification was sent to the taxpayer within twelve months of the end of the tax year in question.

HMRC have been criticised by the Head Tax Adjudicator in a report published in June of last year. This report stated that they were investigating a “marked increase” in complaints that should have been resolved by the tax office using ESC A19. Also that “careless and avoidable errors” had not been noticed and corrected by HMRC whilst handling complaints.

Instead of using this concession, especially when no pattern of tax avoidance is established, HMRC are aggressively pursuing the taxpayer in order to fix their own mistakes. Cheap Accounting director Elaine Clark said, “Taxpayers who suffer errors are being forced to be more tenacious. In our experience HMRC has toughened its stance. It’s almost as if officials don’t read the case file, they just send out a letter demanding payment even if the taxpayer  would have legitimately qualified for ESC A19”. When faced with a bill from an authority like HMRC, taxpayers are anxious about challenging the figures and are unaware of their own rights within the system. Disputes are lengthy, which is why more people are turning to the Tax Adjudicator for justice.

An HMRC spokesperson said that rules had not been tightened and that the number of complaints had “tailed off”. He added that “The concession (ESC A19) only became of interest to taxpayers because we were behind in our end-of-year reconciliation process, but we have now been back on an even keel for years.” HMRC are putting a new system in place to help reduce the number of discrepancies in PAYE payments called ‘Real Time Information’. This changes the requirement for employers to give information annually to monthly or weekly submissions, depending on how they pay their employees. There is a massive amount of information necessary for the 44 million PAYE taxpayers and already there are fears that tax code accuracy has been compromised by the sheer volume of data being processed.

Tony Shanks

HMRC Tax Collectors

Tax collectors are honing in on ‘soft’ targets.

HMRC have hired an extra 200 investigators in the past three tax years, taking the total to 1,600. The Daily Telegraph discovered that the number of tax investigations has doubled in the past year to 237,215 in a bid to recoup the £35 billion tax lost each year. The number of annual prosecutions has gone up seven times in the last three tax years and the number of investigations into self employed ( including CIS sub contractors ) people has multiplied by four.

Tax experts are becoming increasingly concerned that people who have made mistakes on complicated self assessment tax returns are easily intimidated into paying without question. Mark Giddens, a partner at accountancy firm U.H.Y. Hacker Young, said that “teachers, doctors and lawyers” are the “soft targets” being pursued by HMRC. This is because they are more likely to be stressed into paying a bill straightaway, rather than dispute its fairness. Many genuine mistakes involve misunderstandings about capital gains tax, jointly owned properties and second properties.

David Lawrenson from Lettingfocus.com said, “There is a great deal of uncertainty among landlords about what expenses can be offset against income.” You are trying to pay the correct amount of tax so let us cut the confusion and avoid mistakes from the start, contact Tax Rebate Services.

Tory MP Brooks Newmark on the Commons Treasury select committee said that HMRC had been “given a mandate to aggressively go about trying to collect tax” and that “people in middle England are easy targets”…”there are some errors there that HMRC may in previous years have left or not necessarily picked up, but are now nit-picking”.

Newmark also pointed out that there is a difference between a one off genuine mistake and a repeated pattern of tax avoidance over consecutive years. HMRC should treat each type of case appropriately, not apply the same heavy-handed, stressful tactics to both.

This strong-arm attitude seems to be endorsed by the government as it included new powers for HMRC to remove money directly from taxpayers’ bank accounts in this year’s Budget.

A spokesperson HMRC said that the number of cases had gone up because it was holding more compliance inquiries and these “are only opened where we believe there may be a problem causing the wrong tax to be paid”.

Tony Shanks

Uniform Tax Relief And Tax Codes

If you’ve made a uniform tax rebate claim it’s likely you will get a new tax code shortly before or after your claim completes.

Getting a new tax code means that HMRC are adjusting your tax free personal allowance which tells your employer how much tax you should be paying. Having a uniform tax allowance entered in your tax code will result in you having a higher tax free personal allowance resulting in you paying less tax.

Uniform tax code example:

An example of a tax code which has been adjusted to reflect the uniform tax allowance is 1006L. In the 2014/2015 tax year the standard personal allowance is 1000L. The uniform allowance is worth £60 per tax year, which when included in the 2014/2015 tax years tax allowance makes the code 1006L.

If your circumstances change…

If your circumstances change and you no longer have to wash your own uniform or protective clothing for work you should tell HMRC as soon as you can. This will ensure your tax code is changed to make sure you don’t get the benefit of uniform tax relief when you’re not eligible.

Tony Shanks

Tax Relief for Specialist Tools and Clothing Explained

If you need to spend money on tools or specialist clothing for your job, you may be entitled to tax relief.

Trying to understand what your eligible to claim for can be confusing, so if your trying to claim a uniform or tool tax rebate we’ll hopefully make things clearer below.

When you can get tax relief for tools and specialist clothing

Generally, employees are not entitled to tax relief against the cost of work clothing, though there are exceptions. If you work in a sector where protective clothing is necessary (such as the building trade or in metalworking) you’ll need some or all of the following:

  • Overalls
  • Gloves
  • Boots
  • Helmets

You will also be entitled to tax relief if you are expected to pay for all costs of repair, cleaning or replacing the specialist clothing. You may not claim for the initial outlay of purchasing the clothing.

You will also be entitled to tax relief against any tools you must buy to be able to perform your job. For example, as a hairdresser your employer may expect you to purchase your own scissors; this tax relief will also apply against maintenance and replacement costs.

 

What about uniforms?

You are entitled to tax relief against the cost of repair, cleaning and replacement of the uniform on condition that:

  • The uniform is recognisable, demonstrating that you have a certain job – examples are nurses and police officers
  • You are required to wear it on the job
  • You must pay for it yourself

 

Flat Rate Expenses

If you are required to spend your own money on the tools or specialist clothing mentioned above, there are two ways of getting your tax relief back:

  • tax relief for the actual amount that you spent on the items
  • or a ‘flat rate deduction’

The flat rate deduction is a nationally agreed amount by HMRC. There may be local variations in some cases where conditions differ, such as with trade unions and other bodies. Flat rate deduction typically covers what employees in different trades will normally spend each year. An individual working in the clothing industry gets a deduction of £60 each year, a cabinet maker is entitled to £140 per year while a stone mason’s entitlement is £120; it is not required that you be a member of a trade union to get the deduction either.

Flat rate expense example

To calculate the value, you will need to know the tax rate that you pay – you will always get the relief against the highest tax band that you pay. Therefore, if you’re a cabinet maker paying the basic tax rate then you will get a £28 reduction in your tax bill, which is worked out as 20% of £140.

 

Pro’s and Con’s

Actual Cost

You will usually get considerably more money back if you have spent more than the amount of the flat rate deduction you are allowed, but you will have to provide receipts. Typically this type of claim is made by way of reclaiming capital allowances. This is not easy to do which is why we’re here to help.

Flat rate deduction

You’ll benefit from having to fill out less paperwork and you will not be expected to keep a record of each expenditure, but you will lose out if you spend more than the flat rate deduction.

You may also claim several years of relief – the time you have to claim is four tax years.

Tony Shanks

 

 

 

RTI System

New multimillion pound RTI system fails to reduce number of tax discrepancies

Are you one of the estimated  5.5 million people who have paid the wrong amount of tax this year?

The numbers of PAYE errors have increased this year, despite the new Real Time Information system being fully rolled out. You may be one of 2 million people who have paid too much income tax and are due a rebate. Or, more worryingly, you could be one of the 3.5 million people that HMRC are claiming have paid too little. It’s a good idea check your tax code now to make sure yours is right.

The PAYE system only checks tax paid against tax due at the end of every year. This means that things like changes in pay or job are not taken into consideration and lead to over and underpayments of tax. The idea behind the new Real Time Information system is that employers report their wage payments weekly or monthly, thereby ensuring increased accuracy. The Treasury told MPs that R.T.I. would “bring PAYE into the 21st century” and spent £270 million implementing the system. This year the numbers of errors has actually risen from 5.2 million to 5.5 million.

Some businesses had concerns that the new system would be too unwieldy. As payroll consultant Kate Upcraft said, “Taxpayers have spent hundreds of millions on R.T.I. and employers have had to spend hundreds of millions to use the new system, so we are entitled to expect significantly fewer errors in the reconciliation process.”

Tax inspectors have estimated the average discrepancy to be about £300.00 and claim that there have been an increase in errors because there have been an increase in the number of people in employment due to an upturn in the economy. HMRC stand by RTI and say that the positive effects of the new system will be seen in time. They also added that underpayments and overpayments would remain part of our tax system.

Tony Shanks

 

 

One good thing about paying 40% tax…

You get a larger tax rebate

Over the last few tax years more and more people have moved into the 40% tax bracket – when before they weren’t.

Literally hundreds of thousands of UK tax payers are paying tax at a higher rate because of changes in the tax brackets. It basically means you need to earn less before you start paying tax at the higher threshold.

Having to pay more income tax under PAYE is usually something no one wants to do, however one good thing is that you can claim tax relief on your job expenses at 40%, instead of 20%.

This makes a big difference in the amount of income tax you can claim back, essentially doubling the size of any tax rebate your owed.

Example

We have clients who we help each year claim back expenses like mileage tax relief. Many of them are now paying tax at 40% when they weren’t previously.

If you are claiming for 10,000 business miles your claim will be worth £4500.

Paying tax at 20% you can claim a tax rebate of £900

Paying tax at 40% your looking at a refund of £1800

It doesn’t matter what type of claim you are making the additional tax relief applies. So if you are claiming a uniform tax rebate or relief for using your own home you can look forward to a higher refund than most.

So don’t despair when you see the amount of tax taken in your pay packet, just make sure you only pay the you need to by claiming back what’s rightfully yours.

Tony Shanks

A Uniform Tax Rebate Story

Mr Nwulu has been a retail assistant for 5 years and wears a uniform which has his companies logo on. He found about our service from a colleague he works with and applied for his uniform tax rebate online.

 

What happend next…

After answering a few questions and signing our simple claim forms, Mr Nwulu made a successful uniform tax rebate claim and, within 8 weeks received £295.

As part of the claim Mr Nwulu’s current tax code also changed meaning he received a tax rebate for this current tax year and will now pay less tax in the future too.

After receiving his uniform tax rebate, Mr Nwulu told us how happy he was with us saying:

‘I only recently found out you could claim tax refund for laundering uniform. Tax Rebate Services backdated my claim for me and I received nearly £300. Thanks guys.’

Lot’s of British tax payers pay too much tax for many reasons, claiming back a uniform tax rebate is just one of them. Not claiming means you can miss out on money your owed for the last four tax years, and in the future.

 

How can I make a claim?

We specialise in helping people find out what they’re owed and claiming back all the tax relief they are entitled to. You can claim online or by phone, and we make it really easy making it hassle free for you. Get in touch to find out what your due, can you afford not to?

Tony Shanks

MOD Tax Rebates

The Ministry of Defence and HMRC have recently agreed a new Flat Rate Expense for some MOD staff, giving them tax relief on the cost of washing their uniforms. This is good news and means you could be owed an MOD tax rebate and pay less tax in the future.

The agreed flat expense amounts per tax year are:

  • Royal Navy £80
  • Army £100
  • Royal Marines £100
  • Royal Air Force £100

How do I get the allowance?

This allowance is allocated through an amended tax code for tax year 2013-14; it will be listed as ‘Earlier Years Adjustment’. For most people, this revised code number was allocated to the pay for March 2014 although a few took effect in February 2014’s pay. For most, this meant paying less tax in the month where the revised tax code was applied (for individuals not presently in employment who must complete a Self Assessment tax return, HMRC added the adjustment to the statement of account).

How far back does it go?

The allowance will also be given retrospectively to the tax year that began on 6th April 2008 (this will of course depend on length of service). Service personnel will be entitled to their full expense entitlement for each year of service; the entitlement is not reduced if the service period began or ended part way through a tax year.

HMRC will also include any due RPS repayment supplement (this is compensation paid to customers where there has been a delay in the repayment). This will be paid at an average annual interest rate of 0.5%.

Here are two examples showing what you could be due:

Example 1

A Royal Navy recruit commences service in September 2009 and remains with the Navy until March 2012. The recruit was entitled to FREA for three tax years: 2009-10, 2010-11 and 2011-12) and the rate is not adjusted for the years of commencement (2009-10) and cessation (2011-12). The individual remains a basic rate taxpayer throughout the tem of service.

  • 2009-10 £80 @ 20% = £16 + Repayment supplement = 16.32
  • 2010-11 £80 @ 20% = £16 + Repayment supplement = 16.24
  • 2011-12 £80 @ 20% = £16 + Repayment supplement = 16.16

Total Repayment due £48.72

Example 2

In November 2013, another individual joins the RAF as “Other Ranks” and is entitled to the FREA for one year (2013-14) which is not apportioned for that year. Because there has been no delay in making the payment, no repayment supplement is due. This individual too is a basic rate taxpayer.

  • 2013-14 £100 @ 20% = £20 Total Repayment due £20

The allowance, from 6 April 2014, will be allocated by your respective payroll department before the tax is deducted.

Service personnel retain an option of requesting a deduction from actual expenses instead of receiving FREA. Expense claims must be made in writing to HMRC supported by evidence for the claim.

HMRC and MOD continue to negotiation laundry expenses for Officers and other groups employed by the MOD who have different terms and conditions of employment.

What else can I claim for?

Tax relief for MOD staff can be claimed for other types of job expenses. Our service helps many to claim back tax relief on travel from home to base. It’s only possible when your posting is intended to be for less than 24 months. Even if you you receive home to duty pay a claim is still likely.

Claims for mileage aren’t simple, but we make it easy. The rewards are worth making the effort for, with our average mileage tax rebate of over £2500.

Get in touch today to claim your MOD tax rebate.

Tony Shanks

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