How to Claim PAYE Tax Back and Understand Your PAYE Code
If you are employed it is quite common for your employer to deduct your tax payments automatically. For some people you can qualify to claim PAYE tax back.
What does a deduction mean?
To deduct means to deduct certain items from the basis of a tax.
For example, to write off a pension plan, since the amount of this contribution from our taxable amount will be effectively deducted. Another example would be the deduction for donations, in which the taxpayer can deduct a percentage of the amounts contributed during the year to those entities without profit.
HMRC PAYE Tax
Living, working and earning money in the UK means that you have the obligation to pay your taxes, because if you do not the British tax service (HMRC) is very effective with strategies to identify if you evade your taxes. You can also save a lot of money from these taxes if you turn to the right people who can guide you early on.
In the United Kingdom as we know the system that controls the payment of taxes is called PAYE, which means pay according to what you earn.
The types of income that they take into account for this system are the following: normal salary, overtime, bonuses paid vacations, pensions and absences due to illness or maternity. This system is designed to reduce the correct amount of taxes when you reach the end of the financial year.
Your PAYE Reference
The key of the PAYE system is in the code that is assigned to each worker and is composed of three numbers and one or two letters, that code is confidential, that is, is between the worker and the Inland Revenue. These codes indicate to the worker the amount of income that is not deductible, i.e. for which no tax is paid, this amount depends on the annual tax relief that is an amount that is set in the state budgets for the following tax year
And varies according to the conditions of each worker; Age, if married, have children, some special condition, etc.
Example of a tax relief: Suppose a worker earns £75,000 annually. We note that the annual personal allowance is for example of £11,000, taxes are deductible on the amount resulting from subtracting the personal deduction of the salary, that is, £64,000 pounds. That is, £75,000 – £11,000 = £64,000
In order to obtain a tax refund or claim, you must complete the HMRC form P85, click on the link online for getting your tax back, fill in the form, print the document and send it to the offices of Inland Revenue by post. As a reminder, the last P45 has details of the employed person leaving work.
This is a brief overview of how to understand your PAYE tax codes for getting a tax rebate or to claim back tax.
Let’s Talk Tax
Questions? Need tax services and personal advice?
We’re an international income tax return service that feels super fast, personal and fun to give you more time freedom. We know your life isn’t only between 9-5 and neither are we. Book a free call back within 28 seconds, day or night. visit TaxTwerk.com today or call us on 0330 321 1136.