How can one qualify for a PAYE or an income tax repayment
?
It has been estimated that approximately one third of PAYE employees are due an Income Tax Repayment.
This arises for many reasons but the coding system is less than perfect. Also the Inland Revenue do not always check to see if a repayment is due as more often than not a claim has to be made to actually get a refund.
The way to find out if you might be due to an Income Tax repayment is to consider some of the following:-
Any body who has worked for less than a tax year will usually be due a tax refund as they will have unused personal allowances which will give rise to a tax repayment.
Are your total earnings below the personal tax allowance which is currently 6,475? If so then you must be due a tax refund. This allowance is undoubtedly going to increase in the next budget now due on 22nd June 2010.
Alternatively you could be working in the Construction Industry and have had tax deducted under the CIS scheme. Then you will have expenses that may include trade purchases as well as other business expenses, including motor running, that can be claimed as a business deduction against your profits thereby reducing your tax liability.
You could also have had too much tax deducted simply perhaps by having an incorrect tax code. This is a very common error due to the many tax codes that are issued together with the inter action of possible human error combined with very high volume of computer generated code numbers.
This can also occur by having had a benefit perhaps for a car or a health benefit which you no longer have. This is very common as once you have had a benefit coded in, naturally, it is assumed that the benefit continues where in the real world things can change very quickly.
Another example where you could be due a refund is that you may have incurred business expenses that have not been re-paid to you or have been reimbursed but at a lower rate than at which you can make a claim.
A good example of this could be a home carer for elderly or handicapped people who will usually have to use a car so that they can carry out their duties by visiting their clients at home.
If they have not been reimbursed for business expenses which have been incurred then a claim can be made on the business proportion of vehicle running costs which could be claimed as a business deduction. These claims can, in some instances, be carried back for up to 6 years.
To establish to see if you qualify then you will need to consider some very basic questions:-
Have you used your own car to visit your clients and or incurred other business mileage for your assignments.
If these expenses have not been refunded by your employer or if they have been refunded was this at a rate lower than 40p per mile.
You will need to be able to justify your claim. Perhaps you could use a diary of your work schedule or perhaps from any time or work sheets that you keep.
There are many other examples where employees under PAYE who still may be able to make an expense claim and some other examples could be:-
Employees who clean and launder their work clothes if they wear uniforms to carry out their duties. Also perhaps they may have to provide some specific work wear such as clothing or protective boots all of which they can claim for.
There are very many circumstances that can give rise to an income tax repayment so it is something well worth considering as quite often refunds amount to somewhere between 1,000 and 1,300.