Check your tax codes carefully
HM Revenue & Customs has set out twenty-five million tax codes. However, it is feared that potentially millions of taxpayers could be tangled in incorrect tax codes.
It is found that a number of people never check their tax codes to see if they are paying the correct amount of tax.
HMRC itself said that millions of people could get wrong tax code, with some people getting 3 to 4 different tax codes.
Thus, before paying tax, each taxpayer must check if his/her tax code is correct.
Some out of the several codes are:
L: You receive the basic personal allowance.
P: You are 65 to 74 and get the full personal allowance.
Y: You are 75 or over and get the full personal allowance.
V: You are 65 to 74, entitled for the full personal allowance and the married couple's allowance and just pay basic rate tax.
K: You receive no tax-free pay or owe money to HMRC.
T: HMRC requires further information, so cannot allocate another code.
BR: You are taxed at the basic rate.
DO: You are taxed at the higher rate of tax (currently 40%).
NT: No tax is to be taken from your income or pension.
Speaking on the issue, Graham Lewis, a volunteer tax adviser, said, “HMRC staff can be put on to helplines after seven weeks' training. This is not enough.”