For those not familiar with UK tax law, it goes like this:
You don't pay income tax on the first £10,000 you earn.
You pay 20% on everything from £10,001 to £31,655.
Everything you earn after £31,655 to £100k you pay tax on at 40%.
You also get additionally taxed on any benefits (like a company car) or capital gains (over a fixed value- like big share payouts)
To make this quite complicated maths easier, Her Majesty's Revenue & Customs (HMRC aka 'The taxman) give you letter once a year in April with a 'tax-code'- a 3 digit code which tells you how much you get after tax....Easy right.
However: I received a letter this week in a HMRC envelope, saying my tax code had been changed to D0- "Emergency Tax" which is what you get when you owe them money and they want it back....D0 I found out meant instead of the above sliding scale I was on a flat 40% tax for every penny I earned :mad:
The other shoe dropped a day later when a P800 'Tax Calculation' appeared on my mat, showing that I owed the taxman £1484...
As anyone not self employed has the tax automatically paid by their employer, what in the name of Satan's fiery hooves had occurred here?!
A number of folks will know I've got one of those jobs with a multi-national aerospace company that comes with 'Global' in the title, means at least 16 long-haul international flights a year and a company car....And, typically, the company car gets taxed by HMRC as an additional benefit.
Which is listed on the P800.
I check the amount on the company car benefit statement and it's less- in fact it's exactly double according to the HMRC. To the penny.
I call HMRC and- being a government agency and clearly meant to be all about making my life as a tax-paying voter easier- sit on hold for 35 minutes- on a premium rate number I might add, so I did it from my desk phone.
I get through, point out the error and get put on hold for another 5 minutes while he 'checked his handbook on what he's allowed to do over the phone'
He came back and said "Yep- all sorted"
Then I ask about my tax code- same caper, this time I have to tell him my salary..But all sorted.
I now don't owe them a penny and my tax code is right again. :p
....Basically, they decided there was one Jon Lopez working for Moog Inc.
That Jon Lopez was- for reasons best known to the 'deep thinkers' at HMRC was being paid twice.
Two exact same salaries- to the penny. But they could only find records for me paying tax on one of them...
And not only that, but this Jon Lopez two identical Volvo S60 company cars of the precise same spec with the precis same value that- I assume- they thought I put on each foot like roller skates. And they could only find records for me paying tax on one of these too....
So instead of doing some elementary basic logical thought, they went "Meh. Let's rip the backside out of this guy's pay-cheque". :confused:
What if I hadn't actually bothered to challenge it?
How many folks every year end up chunking a load of their hard earned to HMRC because HMRC can't add up?
I joked at work that it's a bloody good job we don't make plane components with same level of mathematics:
"Yeah, we know it was supposed to have 4 engines but we've given it 8 instead.....Sorry" :D
I wouldn't mind, but 10 years ago I received a not-dissimilar tax-bill 3 days before I was getting married, this time because I changed jobs twice in 12 months, HMRC lost most of my records and 'extrapolated what we thought you earned that year'- which turned out to be £6k more than I earned.
After much losing of my letters, that all got sorted- in fact they owed ME £117, which I got a cheque for. :eek:
