According to leading financial services group 1st Contact, applying sound and innovative tax advice to your personal financial affairs is set to create a magnificent start to 2009, a year full of opportunity.
1st Contact demystifies the commonly held belief that managing ones personal tax situation is a cumbersome and difficult process, by offering sound advice on what to expect so that your tax refund has the potential to translate into a valuable financial return.
- When working and earning a monthly income in the UK you should be paying tax on your monthly earnings. If you work under the PAYE scheme, then your employer will deduct this from your monthly salary and pay it to the Inland Revenue (HMRC) on your behalf.
- Ultimately you are responsible for your own tax affairs. It is important to ensure that you are paying enough tax, whilst not overpaying. It is not your employer’s responsibility to ensure that your tax affairs are up to date although they are able to assist you and adjust the amount of tax that they deduct from your salary in order to rectify any discrepancies.
- A tax refund is not extra money as such. It is merely money that you should have received/kept, but ended up paying to the Inland Revenue. One could equate this to a non-interest bearing savings scheme. This can be helpful as many people find that if they pay the correct amount of tax then they tend to spend most of their earnings through the course of the year. A lump sum payment can therefore be valuable for the purchasing of high cost necessities, luxuries and perhaps paying off debt.
- The non-interest factor of a tax refund presents a key issue to be aware of. Should you receive a tax refund for the most recent tax year, this is not a large factor. However, if you receive a refund from a much earlier tax year, you may have missed out on a decent return that would have accrued if you had invested this money in an interest bearing asset.
- When it comes to underpaying your tax, the Inland Revenue will treat you slightly differently. Someone who completes a Self Assessment Tax Return should be doing so before the yearly deadlines and will be liable to pay any deficit in tax to the Inland Revenue. An employee who is not required to complete a Tax Return may get away with an underpayment, but if the Inland Revenue picks this up you can incur fairly substantial penalties and interest on the outstanding tax.
- The Inland Revenue may instruct your employer to adjust your tax code in order to deduct further tax each month and make up the deficit. They may also set you up with a Self Assessment record and you will be required to submit tax returns each year in order for them to recover this underpaid tax as well as ensure that you do not underpay in future years.
As such, our advice is to ensure that your tax affairs are up to date at the end of each tax year as well as informing each new employer of previous earnings relevant to that particular tax year.
For simple and easy assistance to make the most out of your tax return and view it as a sound investment opportunity for 2009, contact 1st Contact Tax Refunds.
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