What happens though if you’ve either overpaid or underpaid tax? If you’ve overpaid your taxes, you have the option to claim a tax refund. You can use the tool provided on the government website to ascertain the required actions or alternatively, submit a letter to HMRC with ‘repayment claim’ clearly indicated at the top. You have a period of four years from the end of the tax year in which the overpayment arose to claim a refund. Once your refund claim is made, you should anticipate receiving it within 5 days to 8 weeks, subject to several factors.
In case of tax underpayment, it’s advisable to quickly reach out to HMRC, providing a comprehensive account of the situation. HMRC will offer guidance on the appropriate measures to rectify the underpayment.
Claiming a Tax Refund for Overpayment
If you’ve overpaid your taxes, you can claim a tax refund within four years from the end of the tax year in which the overpayment arose. To help you with this process, the government provides a tool on their website that provides guidance on the specific documents required for submission based on your unique circumstances. And if you’re registered for Self Assessment, the overpaid tax will be automatically adjusted in your bill.
Resolving Underpayment of Tax
If you’ve underpaid your taxes, you’ll need to take steps to rectify the situation. You can contact HMRC to request the cancellation of the debt. Keep in mind that inadequate tax payment may result in penalties ranging from 0% to 30% of the additional tax owed if the error is a result of lack of reasonable care, or higher if it is deliberate.
Thus, it’s always prudent to ascertain you’re settling the accurate tax amount to avert potential penalties.
Special Considerations for Different Types of Taxpayers
Naturally, individual tax situations vary, warranting special considerations for diverse taxpayer types. Directors of limited companies have specific tax duties to adhere to, including:
- Corporation Tax
- Income Tax
- National Insurance
- Business Rates
They can also claim certain tax deductions to reduce their taxable profit.
Retirees also have specific tax considerations. If you’re a retiree with a state pension, your pension is subject to taxation. If your overall income, including the state pension, surpasses your Personal Allowance, you may be required to pay Income Tax on the surplus.
Directors of Limited Companies and Their Obligations
As a director of a limited company, you’re obligated to:
- Submit a self-assessment tax return, regardless of whether you receive a salary from the company or not
- Report any dividends you receive on your personal tax return as a part of your self-assessment
The director is personally accountable for disclosing and settling the relevant tax.
Retirees and State Pension Concerns
If you’re a retiree receiving a state pension, you’re subject to taxation based on the amount of state pension you were entitled to during the tax year. You’re required to report your defined benefit pension and state pension on your tax return if you have to complete one.
Seeking Assistance With Your Self Assessment
Although this blog post intends to serve as a thorough guide to filing your tax return, at times, you might require further assistance. There are several methods to contact HMRC for guidance on self-assessment tax returns. Or, you might consider acquiring professional assistance for your self-assessment tax return.
Such help can provide empowerment, valuable tax advice possibly improving your take-home income and reducing errors, and confidence that your tax return is being handled correctly.
Contacting HMRC for Guidance
HMRC offers various channels through which you can seek assistance with tax returns, including an online form, webchat, telephone, or postal mail. To avoid long wait times, it’s best to call the Income Tax general enquiry line at 0300 200 3300, use the online services helpdesk for submission issues, access their webchat through HMRC’s digital assistant, or contact 0345 120 3779 for online services support.
For specific self-assessment queries, you can call 0300 200 3600 or, if outside the UK, +44 161 930 8445.
Professional Help: Is It Worth It?
If you’re considering professional help, it’s important to understand the benefits. Tax professionals commonly offer services including:
- Tax consulting
- Tax support
- Tax automation
- Fully outsourced tax services
- Assistance with business, personal, and family tax issues
The cost-effectiveness of engaging a professional for assistance with self-assessment tax returns will vary based on your specific situation and the complexity of your tax forms.
But remember, peace of mind knowing that your taxes are being handled correctly can be priceless – that’s what we specialise in at Mazuma, along with making sure that everything is squared away correctly with HMRC for you.