Is your HMRC Personal Tax Account riddled with mistakes?

When was the last time you checked your online HMRC Personal Tax Account? Are you one of the 15 million people who are at risk of having errors on their files because you haven’t checked?

Official figures show that less than half of all UK taxpayers have logged onto their online account to check that they are paying the right amount of tax. Experts are urging those who haven’t checked to do so immediately!

Personal Tax Accounts were made available back in 2015 and are an incentive for taxpayers to take responsibility in ensuring that their tax code is correct.

These accounts are also beneficial for taxpayers, as they show exactly what the taxman knows about factors such as your income, state pension and National Insurance record.

How do I access my Personal Tax Account?

Follow these 9 easy steps to access your Personal Tax Account:

• Step 1 – get yourself registered. Visit gov.uk/personal-tax-account and enter your name, email address and create a password
• Step 2 – you will be sent a 12-digit Government Gateway user ID via email
• Step 3 – keep a note of this as you will need it every time you log in
• Step 4 – you will then need an access code, which will be sent by text message or automated call once you have supplied your number (mobile or landline)
• Step 5 – enter this access code on to the site
• Step 6 – grab your passport, payslip or P60 form
• Step 7 – depending on which document in step 5 you choose to verify your identity you will be asked a series of questions
• Step 8 – you will then be taken to your account where you can start checking information that the taxman has gathered
• Step 9 – if any information is incorrect you can change it within your account

6.7 million people paid too much tax…

Last year a staggering 6.7 million people paid too much or too little tax all because their tax code was wrong.

The codes include numbers and letters which are used to calculate the amount of tax that should be deducted from wages.

In the past these codes have always been included on payslips, however, since 2015 taxpayers can get a much fuller picture of their affairs, as the code appears next to the taxman’s account of what you earn and what you owe.

Where can I find my code in my online account?

When you are online in your account, navigate to the ‘Income’ section and you will be able to find your tax code.

What if I have several employers?

If you have more than one employers and draw a pension, you’ll have more than one code.

Understanding your tax code…

You can click on the ‘Understand your tax code’ link for a full breakdown of how much tax has been taken from your earnings. In this section it will show you how much employees can earn before they are taxed. In most situations employees are entitled to £11,500 personal allowance before any tax is deducted.

For those who have untaxed income e.g. rent taken from a property, this is what is known as your ‘taxable deduction’ and should also be listed. Any deductions are taken from the basic personal allowance.

How is the tax code created?

Your tax code is created by the last digit being taken away from personal allowance which leaves 1150. A letter is then added which means different things:

• L – entitled to standard personal allowance
• M – receive marriage allowance from your partner
• N – give marriage allowance to your partner

What errors should I be checking?

You should log in and check whether your earnings recorded by the taxman are up to date. Follow these easy steps to check your details and change them:

• Step 1 – log in to your online account using your gateway ID
• Step 2 – click ‘view your income tax estimate’ which can be found in the income section
• Step 3 – if the figure is wrong you can change it. Click ‘view employment details and company benefits. Here you will find an option that will allow you to ‘Update your estimated income’
• Step 4 – the tool will ask you the following questions:
  • Have your working hours changed?
  • How often are you paid?
  • How does your salary appear on your payslip from work?
• Step 5 – with this information it can calculate how much you earn so that records can be updated

Those who are self-assessment taxpayers e.g. the self employed, business owners, those who receive more than one source of income etc. can also use their account to update and file tax returns and make payments.

Take control…

To make sure that you are paying the right amount of tax, you need to take control and ownership of your online Personal Tax Account and make sure data is correct.

If you have any questions about your Personal Tax Account or would like to speak to us about tax in general, please do not hesitate to get in touch.