April, 2010

Claiming Tax Back After going on Sick Leave

Being sick is always a horrible experience.

This article may help to put a silver lining on being ill, as it explains you how you might be able to claim a tax refund if you were on sick leave from work.

  1. What is sick pay?
  2. Is sick pay taxable?
  3. Can I claim a tax refund?
  4. What is the deadline?

What is sick pay?

There are two types of sick pay

  1. Statutory sick pay – If you are off work ill, this is the most common type of sick pay that employees get.

  2. Contractual sick pay – When you signed your work contract, there may have been a section which stated you were entitled to extra income above the rate of statutory sick pay

Is sick pay taxable?

Statutory Sick pay (SSP) is paid weekly at the rate of  £79.15

As your sick pay is a form of income it should be taxed and there is often the misconception that SSP is tax free.

Even though you need to pay tax on your SSP often people end up overpaying and as a result can claim a tax refund.

Can I claim a tax refund?

Often people overpay tax when they go on to SSP.The reason why people over pay is that each year, everyone is given a tax free allowance (currently  £6,475). If, for example, you are on sick pay for the whole year, you would have only earned:

52 x £79.15 = £4115.80.

Because this is below the tax free allowance, any tax that you would have paid would be refundable. Even if you are not on SSP for a whole year it is possible to make a claim. At the end of the tax year you will get a P60 from your employer. Use this and a tax refund calculator to see if you may be due a tax refund:

Your P60 should look similar to this:

There are two boxes which have ‘total for the year’ written next to them and ‘Tax’ and ‘Pay’ above them. You can see a clearer image of where these are located on the P60 below:

What is the deadline?

If you have been on sick leave anytime in the last 6 years, you may be due a tax refund. The deadlines to make a claim are currently changing and we therefore recommend that you make any claims as soon as possible.

If you have any questions about being on SSP and claiming a tax refund, please leave them in the comments below and we will endeavour to answer them:

Claim a Tax Refund Today

apply for a tax rebate

Further Reading:

P60 & Tax Rebate – How to check

Every year you employer is required to give you a P60.

This document shows how much tax you have paid during the year and how much income your have earned.

This article will help to answer some common questions around P60’s and how to check them for a tax rebate.

  1. When do I get my P60?
  2. How do I get a replacement P60 if I have lost mine?
  3. How do I check my P60 for a tax rebate?
  4. What do I do if my P60 is wrong?

When do I get my P60?

Every year when the tax year finishes (April 5th) employers need to give you a statement of your income and tax paid. This is your P60.

Your P60 should be automatically given to you by your employer between April 6th and 1st June.

If you have not received your P60 after that the 1st June, you should contact your employer to find out why they have not given you one.

 

How do I get a replacement if I have lost mine?

If you need to get a replacement P60 because you have lost the one given to you from your employer or you were not given one in the first place, then there is a relatively simple procedure to get one.

All you need to do is write to your employer and ask for a ‘statement of earnings’ on company headed paper for the tax years that you worked. We have a template letter if you would like a copy, Email us on: templateletter@taxfix.co.uk and we can send you one.

A statement of earnings will be accepted by the Inland Revenue as a replacement for a P60 or P45.

 

How do I check my P60 for a tax rebate?

Your P60 should look similar to the image below:

There are two boxes which have ‘total for the year’ written next to them and ‘Tax’ and ‘Pay’ above them. You can see a clearer image of where these are located on the P60 below:

Take the amount from the Green box and input it into our P60 tax calculator in the section called ‘Pay for the year’ . Note the amount from the blue box and input it into the ‘tax deducted’ section in the calculator. Then press ‘Calculate’ and the P60 tax calculator will determine if and how much your tax refund is for the year.

You can repeat this for the last 6 years, as this is the current deadline for making any claims. (These deadlines are changing so we suggest that you do not wait too long!)

 

 

What do I do if my P60 is wrong?

If there is a mistake on your P60 you should contact the payroll department of your company to notify them of the mistake. They may be able to provide you with a corrective version of your P60. It is their responsibility to ensure that they have the correct data and information about you.

You can check to see if you P60 looks reasonable by comparing it to the wage slip given to you just before 5th April (the end of the tax year).

Your wage slip should tell you a ‘YTD income’ and ‘YTD tax’. This is the amount of income you have earned so far in the year and the amount of tax you have paid. These number should be smaller then your P60 numbers by a few weeks. You can factor in the extra weeks of income and tax to get a more accurate representation.

 

The Differnce Between a P45 a P60 and a P46

The Inland Revenue does not give their tax forms the most discrpitive of names. As a result it can be quite confusing to know the diffrenece between the various ones that you are given. This article will help to explain, in plain English, the difference between a P45, a P60 and a P46.

P45

You will get a P45 when you stop working for a company, get laid off or quit for any reason, such as being fired. Your P45 will show various pieces of information including your PAYE reference code and how much you earned and paid in tax during the tax year.

Your P45 will be in 3 parts. When you find another job you should give parts 2 and 3 to your new employer. This will allow them to see how much tax you have paid and put you on the correct tax code. Often people loose their P45 or forget to give it to their employer. When this happens the employer is forced to put you on an emergency tax code which often means that you end up overpaying tax until you claim a  tax refund at the end of the tax year.

If you do not want show your employer your P45 because you want to keep your previous wage confidential then you can get around giving them your P45 by sending parts 2 and 3 to your tax office telling them where you are working. You should make sure that you do this as soon as possible otherwise you could be put on the wrong tax code.

If you are leaving the UK you should keep your P45 safe so that you can apply for a tax refund when you are ready. Be sure not to wait too long as tax refunds do expire.

P60

p60 difference If you are working at the end of the tax year (5th April) you will recieve a P60 from your employer, anytime between 5th April and 1st June.

Your P60 is a statement which shows how much you have earned and how much you have paid in tax during the year.

Your P60 will show your tax code, national insurance number, tax paid, income and national insurance contributions from April 5th of the previous year until April 6th of the current year.

Your employer is required to give you a P60 and if they do not give you one after 1st June, you should enquire with your pay roll department.

Your P60 is a useful document because you can use it to see if you are due a tax refund at the end of the tax year. You can check if you are due a tax rebate by taking the ‘pay’ and ‘tax’ figures from your P60 and putting them into our online tax rebate calculator .

If you loose or are not given a P60, you can ask your employer for a statement of earnings on company headed paper. This will show the same information and can be used when applying for a tax rebate.

P46

If you loose your P45 or were not given one by your employer, because they say, went bankrupt. You can give your new employer a P46 instead. You need to complete the P46, and once you have, give it to your new employer so that they can put you on the right tax code.

The VAT Cut – All Bark and No Bite?

The VAT Cut – All Bark and No Bite?
The VAT Cut – All Bark and No Bite?

The government’s plan to cut VAT to 15% (rather than the typical 17.5%) is being met with a resounding shrug of the shoulders by the Great British public, but is this a fair response? Should we as a nation be more enthusiastic as a result of what is effectively a tax reduction in our favour? After all, it is money in our pockets… right?

Actually, no. Not necessarily, anyway. For a start, there’s nothing to say that the retailers themselves have to pass this saving on to the customers; several retailers are choosing not to lower prices, but instead are using the extra money to pad out their profit margins and help keep themselves bundled up against the (now very real) cold wind of recession. Even though Darling has said he hopes retailers will pass on the savings to the consumer, this isn’t likely to happen, especially in smaller cases. Why? Firstly, because most people are not going to be swayed by a penny or two off the price of a small item, and secondly because the effort involved in changing the details of every item in a shop – especially those which don’t have sophisticated software – is too much to make it feasible. Imagine having to print out new labels for every item in a clothes shop. It’s just not going to happen.

Of course, even if the public had embraced the cut, would it really be that much help? Probably not. The problem is, while a 2.5% cut sounds like a big deal, it is only applicable to the things you buy. What is the benefit of a £2.50 saving on an item when you still have to spend almost £100 to get it? Sure, there are larger purchases on which the savings might be substantial (a new car, for example, on which you might save hundreds of pounds), but the whole point of a recession is that larger purchases tend to taper off, so few people will feel any real benefit. There’s always the argument that any cut is good news (after all, everyone needs essentials), but given that VAT isn’t charged on food products anyway, the average family’s weekly bill is not likely to fall by much.

While the Chancellor’s attempt to get the country buying again – and thus kickstart the economy back into action – initially looks like a step in the right direction, it ultimately seems that Darling’s fiscal stimulus is gearing up to be a bit of a damp squid… most definitely not the kind of result the UK is looking for in these financially uncertain times.

If you need any help to get tax back from the Inland Revenue, Tax Fix’s experienced team are more then happy to answer any questions or queries that you might have.

The Budget and your Tax Refund

How will the budget affect your tax rebate?
How will the budget affect your tax rebate?

The budget for 2007 was released on March 21st with a surprise reduction of 2 pence on income tax, at the end of what is likely to be Gordon Brown’s last budget. The initial sweet taste will soon disappear when we factor in the new amendments the chancellor has in store for us.

The government has decided to scrap the starting rate of tax, which currently stands at 10% of your income between £5,035 and £7,385. In Gordon Brown’s defense this is probably a positive change as it simplifies the tax structure and the starting rate seems to be almost a token offering.

The net effect of the changes in income tax will be a negative one for anyone earning below £17,000 but a positive one for anyone earning between £17,000 and £40,000. Those earning over £43,000 will pay £20 a year more in tax.

The most common reason for people being due a tax refund from HM Revenue & Customs is that they have only worked for part of a tax year, resulting in their tax allowance and starting tax rate being calculated incorrectly. As the new budget will abolish the starting rate of tax, it will reduce the number of people who are due a tax refund. We should see this as a positive sign as it means we are more likely to be paying the correct amount of tax and as a result are not due a tax refund.

Tax Refunds – The Governments ignorance

Claim your tax back from the government before its too late.
Claim your tax back from the government before its too late.

The government, as you would expect, has an extensive database which holds information on how much tax you have paid and how much you have earned over the past 6 years.

The government can tell in an instant if you have overpaid or underpaid tax, as in effect it is a simple calculation, deducting your tax free allowance and then working out how much tax you should be paying.

Even though the government has such an extensive database of our income records, they fail to let us know when we have overpaid tax. They say that the onus is on us to claim a tax rebate which might be due.

article on the BBC web site highlights how the government are effectively stealing money which is rightfully ours, currently over £300m a year because people are overpaying taxes due to moving jobs, traveling or stopping work.

Is the government playing dumb intentionally, keeping the tax rebates that rightfully belong to its citizens? If you do not claim your tax refund after 6 years, you no longer have a claim to it!

Income Tax Back for Mothers Returning to Work

Having children can end up costing you hundreds of thousands of pounds during your lifetime. It can also be a very stressful time for both parents. Invariably at least one of the parents will have to take some time off work and this can have a detrimental effect on your financial affairs that you may not have anticipated.

There is however a little known financial benefit that parents can take advantage of. If you have left work in the last 6 years to look after your baby, it is highly likely that you could be due a large income tax refund.

A great number of parents ask, “How can I claim tax back?” The reason why this is possible is because you probably stopped working part way through the tax year, resulting in your tax free allowance being calculated incorrectly.

The Inland Revenue very rarely contacts people to let them know they have paid too much tax, and the onus is on you to apply for a tax refund.

Tax Rebates – Are they bad?

Do you really want to know how to claim a tax rebate?
Lawyers and other people who pay professional subscriptions are due income tax back.

Recently we have begun to see things through a different perspective. We should not be happy to receive a tax refund and if we ever owe money to the Inland Revenue we should be happy. The reason behind this thinking is that if we are due a tax refund, it means that we have unnecessarily paid tax throughout the year and have effectively given the government an interest free loan for 12 months.

Imagine if you are given a tax refund of two thousand pounds. If this two thousand pounds was put into an instant access savings account for year at 5% it would have returned a gross amount of 100 pounds. Therefore the cost to us of having the tax refund is 100 pounds.

Let me put it another way, how would you feel about this: You give me 100 pounds out of your wages each month, and in a year’s time I will give you one thousand, two hundred pounds. It doesn’t sound as attractive now does it?

The opposite is true also; we should be happy when we owe the government tax. It means that they have given us an interest free loan! This thinking might help put a sugar coating on any tax payments you might have to make.

Are all Students due tax rebates?

Most people think that students do not have to pay tax. This is unfortunately incorrect. It makes no difference whether you are 3 or 33, you still have to pay the Inland Revenue a proportion of your earnings if you earn more than your tax free allowance of £6,425

However, the majority of students do hold one major advantage over the rest of the population. If you are a student and you are working, it is very likely that you may be due a tax rebate. The reason for this is because most students who do work will earn less than their personal allowance. A student would have to work for nearly a quarter of the year on a full time basis before they would use up all of their tax free allowance. Many employers will not take into the account that you are only going to be working for part of the tax year and if you have paid too much tax, you cannot rely on the Inland Revenue contacting you to tell you. The onus is on you to make a claim.

Students are one of the poorest demographics, as they have very little disposable income. If you are a student, don’t let the government take away the small amount of money that you do earn. Why not check to see if you are able to claim a tax rebate. With Tax Fix you have nothing to lose and could be in for a big windfall!

The year you decide to go out into the real world to find a job you will have only worked for part of a tax year, which is another factor which will help secure you a tax rebate. Remember, you can claim a tax rebate for the past 6 years, so think about any summer jobs or holiday work you might have had and make those claims.

Get a tax refund if you are traveling around the world

Are you working and traveling? You may be due a tax refund
Are you working and traveling?  You may be due a tax refund

Taking a gap year to go traveling around the world is becoming more and more popular. There are many opportunities in a number of countries which let people work and travel at the same time, such as the world/travel visa available in Australia and also in the United Kingdom. Traveling can be an expensive pastime so we have tax tip to help you get the maximum amount of money from your pay cheque.

Most people are unaware that if they leave the UK to go traveling, they are 95% likely to be due a tax refund. If you have been working hard to save up for your travels, this tax rebate could be very helpful. Everyone working in the UK has a tax free allowance (currently £6,235) that is calculated by dividing the allowance by the number of months in a year, and then allocating the allowance every time you get paid. This allowance does not factor in the possibility that you may leave the UK half way through the tax year. This is why you should be due a tax rebate.

There is a double bonus however. When you enter another country that has a similar tax allowance, like Australia, you are probably not going to work a whole tax year and as a result will be due another tax refund. The same is true when you enter another country and then again when you finally come back to the UK and start the old 9 till 5 job again.

We all know that travelers are one of the types of people most in need of extra money, so don’t let this tax refund go to waste.

Why not check to see if you are due Tax rebate today? Tax Fix offers a ‘No rebate, No Fee’ policy.