Tax Rebates & Refunds

The importance of reporting income changes to HMRC

February 28, 2013
Posted in Income Tax — Written by Jennifer

Whenever anything changes in your life, whether it’s your address, your marital status or your job, you must check whether you need to tell HM Revenue & Customs (HMRC) about it. The department doesn’t need to be informed of these changes simply to keep records about you; it needs the information in order to calculate your income tax properly.

One of the most important changes you must immediately inform HMRC about is a change in your income. Your income may change if you:

• Get a second job
• Get a pay rise or a promotion
• Lose your job or are made redundant
• Start receiving a state pension
• Carry out self-employed work
• Start or stop receiving benefits

If your income changes, even by a small amount, you must let HMRC know. This is because even the difference of a few pounds could push you over or under your tax-free Personal Allowance threshold. Unless you inform HMRC of the change, you could end up underpaying income tax and have to make it up later. Alternatively, you could overpay your tax and have to claim a tax refund.

It is also important to remember that if you don’t provide accurate and honest details about your income, you will be breaking the law.

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