Tax Rebates & Refunds

The wrong tax code theory

April 1, 2011
Posted in Uncategorized — Written by Geoffrey

Tax codes inform taxpayers about how much their employer and pension firms can deduct from income tax. Tax codes are allotted annually to the employees and tax is deducted as per the codes from an employee’s weekly or monthly wages.

Millions of people around UK pay wrong taxes, either more or less because they have been given wrong tax codes. Usually taxpayers end up paying more taxes than they have to and sometimes they do not realize that they have had paid more taxes than their actual tax cost of a given financial year.

Reason and Types of errors in Tax Codes

The main reason of allocation of wrong tax codes among employees is the new Computer system designed to process the income tax generation and collection through PAYE system. According to an article published in “TELEGRAPH”, even HMRC accepted that the introduction of the new service had been difficult.

Common errors include employees being put up on higher tax codes, their personal allowance removed and even insertion of extra digits in net payable taxes inflating the taxes erratically. Taxpayers can pay for a considerable period of time without even realizing that they are paying more than the actual taxes they have been levied upon.

Measures being taken to improve the existing situation

Tax governing bodies are constantly reviewing the cases which are at risk and finding solutions to it. However the contact centers are well equipped since the new system has created a single taxpayer record, which can be quickly worked upon by the operator.

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