Can we claim back any of the tax (paid at 40%) on backpay?

#1
thought i would post this in the Finance forum too, as it might throw up some answers from people who don't read the RHQ forum:

CRmeansCeilingReached said:
HatsRus said:
Anyone out there know what the tax implications of this are going to be? I have been aware of my faulty pay for 4yrs now, so you can imagine the lump sum i rxed.(approx 10,000) Naturally the tax man took 40%, however i should not have paid 40% tax at all if the pay had been correct each yr. So what are the pay people going to do about recouping it for me. Also next yr my tax will be calculated on what i earnt this yr!!!! And then there is the Child tax credits as now i do not qualify for next yr. and the list goes on.

Last time the army messed up on my tax i ended up with a bill for £1200 at the end of the yr + threatening letters. The Army answer was that tax probs were between me and the inland Revenue. Failing to point out that actually it was there F**K Up which caused it in the first place.
pay wallahs, any answers on this? with this latest lower band / upper band correction, i just received backpay of £5317, of which the taxman took £2126 (40%) - plus of course national insurance. i am only just nudging into the upper tax bracket due to being in NI; had my pay been correct each year, i should have paid 25% (or whatever it is) - or at least on some of this backpay. the difference between 25% and 40% on this sum is over £800, so quite interested to hear if there is any way of claiming back the excess tax i have paid? either through the army or from the inland revenue?
 
#3
Of course you should be entitled to have the tax deducted at the appropriate rate. However, the pay office is also right to point out that your tax is a personal matter between you and the Inland Revenue. They will deduct tax at the rate they deem appropriate when they are presented with the figures for income. If the only visibility they had was that you suddenly had an increase in pay this year, they will have taxed accordingly. I strongly suggest you liaise direct with the tax man and seek direct advice. In my experience, they are extremely helpful and their services are free (unlike accountants who could do the same job for you).

As an example, I once managed to acrue 7 years worth of unpaid tax on rental income while serving abroad. I unwittingly had a few grand's worth of unpaid tax sitting in the bank as a consequence, which should have been paid to the tax man by my property agents. I considered engaging an accountant to try and save me money on my unpaid dues, but they were going to charge me a fortune to 'save me money'. In the end I came clean with the taxman, who took all the money and held it while they did some calculations for free. They then gave it all back to me and said that I even had a tax break to carry forward to the next year! Hurrah! All my money back and more besides, due to engaging with the tax man direct. I think they also came top of some customer service poll recently.

If you talk to them you could well get a rebate and a recalculation of your tax code for next year.

ARNJ
 
#4
thank you very much! been to the APO and been given a direct line number for members of the forces to call the tax office. 0845 3003949.

of course it is engaged at the mo......... :)
 
#5
SKID986 said:

They will deduct tax at the rate they deem appropriate when they are presented with the figures for income. If the only visibility they had was that you suddenly had an increase in pay this year, they will have taxed accordingly.
The reality is that they have worked out the gross shortfall in wage over several years and lumped it into a single payment calculating tax based on the current year, hense the top rate 40% and now advise you that it is your responsibility to sort it out with the tax office. That is total idleness and if I did that to my civillian employees there would be a mutiny. There are tax codes and scales issued by the Inland Revenue and the correct amounts could have been worked out by the APO. I've never heard such a lame excuse. This is not providing a service to our soldiers it is blatently fukcing them around. I wonder how many lads will not be aware that they have now over-paid tax and know how to claim a rebate?

I wonder what the CDS says about that then? Bring on the Federation.

By the way the IR are not always as helpful or accommodating as suggested and many accountants have a set rate for an annual tax return and will look at other areas you might claim relief of tax, something the IR will not be pro-active about.
 

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