What does PAYE mean?
PAYE (pay as you earn) refers to the tax deductions on your salary before you receive it. It is the way the majority of employees pay their income tax, and it is sent from your employer direct to HRMC. Deductions for your national insurance contributions and student loan payments are also made this way.
Your PAYE explained
Your rate of tax is calculated based on your salary. You may pay your tax at 20%, 40% or 45%.
• Basic-rate is 20% on income of £11,851-£46,350 or £12,501-£50,000
• Higher-rate is 40% on income of £46,351-£150,000 or £50,001-£150,000
• Additional-rate is 45% on income of £150,001+
You wage slip should show the following information:
• Company of employment & employment number
• Your name & UTR (unique taxpayer reference)
• Department (management, sales, administration)
• Payment method (BACs)
• Payment period (weekly or monthly)
• Basic pay (overtime, if any)
• Basic rate & national insurance deductions
What does a PAYE payslip look like?
PAYE and your Pension
Paye is a way to collect tax on a pension income. The provider collects the tax (this is normally a pension scheme or annuity), and they forward it direct to HM Revenue & Customs, they also deduct tax you owe on a state pension. If you stay in employment while you receive a pension, you will pay tax on both your earnings and the pension. If a state pension is your only income, or you have another source of income, you must declare it yourself and file a self-assessment tax return.
Self-employment and PAYE
Self-employed workers will need to file a self-assessment income tax form. They need to be done once every financial year, plus make 2 ‘payment on account’ deposits to HM Revenue and Customs in January and July. You can pay your self-assessment through the PAYE system if your tax bill is less than £3,000 or if you already pay through PAYE, this could be because you are employed by a company as well as making an income through self-employment.
Self-assessment tax returns should be filed by October 31st if they are paper copies, online tax returns should be submitted by January 31st.
What Can I Claim Tax Back On?
You can claim tax back on most work-related expenses. Below is a list of items that you can request a tax rebate on:
• Vehicles for work use
• Fuel/Mileage costs
• Travel expenses
• Overnight expenses (food in certain circumstances)
• Rail Tickets (single & season tickets)
• Uniforms, work clothing and tools
• Cleaning costs for uniforms
• Professional fees, subscriptions & unions fees
This list is an example of what you could claim back; there may be expenses & items specific to the job role that you could claim back.
What are the Deadlines?
In the UK, the current legislation states that you can claim back up to four years when claiming a tax rebate. What this means is you could claim for the following tax periods:
• Year ending 5th April 2016
• Year ending 5th April 2017
• Year ending 5th April 2018
• Year ending 5th April 2019
Over such a long period of time wage slips and p60s can be lost or misplaced. In most cases, this is not a problem as at Swift Refunds we can seek copies from HM Revenue & Customs on your behalf.
Am I Due Any Tax Back?
Most workers, whether employed or self-employed may be due a tax rebate for work-related items, expenses or because they have paid too much tax. HMRC do not know everyone’s individual circumstances, and it is up to the taxpayer to contact HMRC to see if they are entitled to any tax relief.
Other reasons for a tax refund may include pension payments, redundancy payments, interest from a savings account, PPI, or UK income if you are living aboard.
All claims for tax refunds and rebates are reviewed on a case by case basis. Use our tax claim form and answer a few simple questions to see if you could be entitled to make a claim.
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