Are You Paying Too Much Tax on Your Savings?

Recent reports suggest some savers are paying more tax than they should because HMRC has used incorrect savings interest figures when calculating tax codes.

With interest rates having been much higher over the last few years, more people are exceeding their Personal Savings Allowance and finding HMRC adjusting their PAYE tax codes to collect additional tax. Unfortunately, where HMRC's figures are wrong, the result can be an unexpected and costly overpayment.

Problems can arise where:

• Savings interest has been overstated.

• Old estimates have been used instead of actual figures.

• Information has been allocated incorrectly.

• Tax codes have been adjusted without taxpayers realising.

The important point is that HMRC's calculations are not always correct.

Check Your Tax Code

If you are employed or receive a pension, your tax code may already have been adjusted to collect tax on savings income. A quick review could identify errors before they become costly.

We Can Help

We are happy to review our clients’ tax codes and check whether HMRC's savings income figures appear reasonable.

HMRC no longer routinely sends tax code notices to agents as it did in the past. This means we may not be aware that your code has changed unless you tell us.

If you receive a coding notice from HMRC, please send us a copy and we will gladly check it for you.

For many of our clients who complete annual tax returns, any errors in HMRC's savings income figures will normally be identified and corrected through the Self Assessment process. Those who do not submit tax returns and rely solely on PAYE may have no automatic correction mechanism, meaning an incorrect tax code could result in them overpaying tax.

If you know anyone who may have concerns about their tax code, please feel free to put them in touch. A quick review could help ensure they are not paying more tax than they need to.

We will be very happy to help.