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Claiming Tax Back?
8 Answers
My 18 year son started his first job last may, he's been told he only as till April to claim any tax back that he's owed. How would we do this? I don't think he's even got a tax number. Any advice on what to do please?
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Yes, HMRC uses the NI number to identify taxpayers under PAYE.
If he has a tax code, typically 100 these days, his employer will have deducted tax correctly.
Only if he is on emergency tax or has a code BR (basic rate) will the deductions be wrong.
In even event, it is not true that he has only until April. What they perhaps told him is that he can't get the refund until AFTER April. That isn't true either - just needs to sort his tax code correctly.
If he has a tax code, typically 100 these days, his employer will have deducted tax correctly.
Only if he is on emergency tax or has a code BR (basic rate) will the deductions be wrong.
In even event, it is not true that he has only until April. What they perhaps told him is that he can't get the refund until AFTER April. That isn't true either - just needs to sort his tax code correctly.
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>>>he's been told he only as till April to claim any tax back that he's owed
. . . obviously by someone who knows nothing about the tax system because:
(a) the statement is completely false ; and
(b) I can think of no reason why he should have overpaid tax anyway.
The PAYE tax system divides a person's annual allowance into 52 parts (or 12 if he's paid monthly). At the end of each week (or month) the system examines:
(a) how much has been earned so far in the tax year ; and
(b) what the total tax-free allowance is so far.
It then subtracts b from a to work out how income is taxable and then calculates the total tax (usually at 20%) payable so far.
Then it looks at how much tax had been paid up until the end of the previous week (or month) and subtracts that in order to deduct the correct amount of tax for the current period, thus bring everything up-to-date. i.e. THE PAYE TAX SYSTEM IS SELF-CORRECTING.
The only time that it can get things wrong is if a person stops working (or switches to a lower paid job) at the END of the tax year (NOT at the beginning). That's because the system will have been deducting tax on the assumption that the same rate of pay will continue until the end of the tax year, possibly resulting in an overpayment.
So I very much doubt that your son will have overpaid any tax. The only exception would be if his tax code is still shown on his pay slip as 'BR' ('basic rate') instead of '100L'. In which case he should ask his employer to get it adjusted and his tax position will automatically be corrected.
If your son still wants to check his tax position at the end of the tax year he should look at his P60. That will show the total amount he has earned during the year. If he deducts £10,000 from that and multiplies the result by 0.2 he'll have the amount of tax he should have paid. It should match the amount shown on the P60. (If it doesn't, the tax office would still normally correct the situation automatically anyway but he could still ask his employer to check for him).
. . . obviously by someone who knows nothing about the tax system because:
(a) the statement is completely false ; and
(b) I can think of no reason why he should have overpaid tax anyway.
The PAYE tax system divides a person's annual allowance into 52 parts (or 12 if he's paid monthly). At the end of each week (or month) the system examines:
(a) how much has been earned so far in the tax year ; and
(b) what the total tax-free allowance is so far.
It then subtracts b from a to work out how income is taxable and then calculates the total tax (usually at 20%) payable so far.
Then it looks at how much tax had been paid up until the end of the previous week (or month) and subtracts that in order to deduct the correct amount of tax for the current period, thus bring everything up-to-date. i.e. THE PAYE TAX SYSTEM IS SELF-CORRECTING.
The only time that it can get things wrong is if a person stops working (or switches to a lower paid job) at the END of the tax year (NOT at the beginning). That's because the system will have been deducting tax on the assumption that the same rate of pay will continue until the end of the tax year, possibly resulting in an overpayment.
So I very much doubt that your son will have overpaid any tax. The only exception would be if his tax code is still shown on his pay slip as 'BR' ('basic rate') instead of '100L'. In which case he should ask his employer to get it adjusted and his tax position will automatically be corrected.
If your son still wants to check his tax position at the end of the tax year he should look at his P60. That will show the total amount he has earned during the year. If he deducts £10,000 from that and multiplies the result by 0.2 he'll have the amount of tax he should have paid. It should match the amount shown on the P60. (If it doesn't, the tax office would still normally correct the situation automatically anyway but he could still ask his employer to check for him).
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