Are You Paying Too Much Tax?
- MAZ
- Oct 13
- 21 min read
The Clear-Answer & Basic Checks – Are You Really Paying More Than You Should?
The direct answer
Picture this: You’re staring at your payslip or your Self Assessment bill and thinking “I’m sure this is more than I should owe.” The short answer is yes, many people are paying more tax than they strictly need to — not because HMRC has mis-priced tax, but because thresholds, allowances, and reliefs get misapplied, overlooked, or because of “fiscal drag” (frozen thresholds) pushing people into higher rates without real “real-income” improvements.
As of 2025/26, here are the headline figures:
UK region | Personal Allowance | Basic Rate Band (to) | Higher Rate Band (to) | Additional Rate Income Above |
England, Wales, Northern Ireland | £12,570 | £12,571 → £50,270 | £50,271 → £125,140 | Over £125,140 |
Scotland* | £12,570 | Starter (19%): £12,571 → £15,397 Basic/Intermediate etc. through to Top rate (48%) above £125,140. MoneySavingExpert.com+5wesleyan.co.uk+5GOV.UK+5 |
* Scottish rates have more bands (Starter, Basic, Intermediate, Higher, Advanced, Top) and different %s.
Also:
● Personal Allowance remains frozen at £12,570. House of Commons Library+2growthcapitalventures.co.uk+2
● If your adjusted net income is over £100,000, you lose £1 of the Personal Allowance for every £2 over £100,000. That means above ~£125,140 you get no Personal Allowance.
● National Insurance (NIC) rates for employees in 2025/26: 8% on earnings between the Primary Threshold (£12,570/year) up to the Upper Earnings Limit (£50,270), then 2% above that.
These numbers mean that many taxpayers are creeping into higher tax bands or paying more NIC without realising, especially where income rises but thresholds don’t (inflation, bonuses, side income). In my practice, I see this often with people who get a small raise or extra freelance gigs and assume tax on that bit will be “normal”, only to find themselves paying 40% + 2% NIC (or even losing Personal Allowance) on part of their earnings.
So, yes, you might be paying too much — but to know how much and what you can do about it, you need to run through some checks. Let’s do those now.
Basic Checks You Should Always Run
These are the first things I walk through with EVERY client. Do these, and you’ll spot most common overpayments or misclassifications.
Check Your Tax Code
○ Is it the correct code (e.g. 1257L or variant, emergency code, etc.)? If it's wrong, your tax deducted via PAYE could be too high.
○ For people moving jobs in the year, changing benefits, or changing marital/partner status, the code may lag or misstate your allowances.
Calculate Your Effective Marginal Rate
○ If you earn between £100,000 and ~£125,140, you’re in what I call the “Personal Allowance taper zone” where for every additional £1 you earn, you lose 50p of PA; that part of your earnings is effectively taxed at 60% (40% income tax + loss of 20% allowance), plus NICs if employee. Many people don’t realise how steep that zone is.
○ Use a spreadsheet or online calculator: take your total taxable income (including side income, bonuses), deduct known allowances, apply tax bands, then add NIC. Compare to your pay slips or final SA bill.
Include All Sources of Income
○ Salary, pension, bonuses.
○ Side gigs, freelance, rental income, investment income (dividends, savings interest). Even if each is small, together they can push income into higher bands.
○ Overseas income (if UK resident & taxed on worldwide income), benefits, etc. Must include all or risk under-taxing or missing reliefs.
Check Your NIC Situation
○ Are you paying correct Class 1 (if employee), Class 2 & 4 (if self-employed)?
○ Are you using Employment Allowance (if you’re an employer)? Many business owners overlook employer NIC costs which can sneak into profit reduction or pricing.
Check Reliefs & Allowances You're Eligible For
○ Marriage Allowance (if basic rate taxpayer, spouse under threshold).
○ Blind Person’s Allowance, other disability or age-related allowances (though many of those have been phased out or reduced).
○ Pension contributions, gift aid: these reduce taxable income.
○ Charitable donations.
○ Business expense deductions (for self-employed) or allowable expenses (for employees) such as travel (if not reimbursed), tools, professional subscriptions, etc.
Watch Out for Hidden Traps
○ Emergency tax codes (temporary, often when HMRC doesn’t have all your income information).
○ High Income Child Benefit Charge (if one earner > £50,000; gets severe if above £60,000).
○ IR35 / off-payroll rules (if you work via an intermediary/consultancy or Personal Service Company). Misunderstanding status can cost tens of thousands.
○ Undeclared side incomes (rental, gig economy, tips) — HMRC is increasingly doing data matching and cross-checks.
Case Study: Bob from Manchester & The £100K “Trap”
To make this concrete, here’s a real case I handled earlier in 2024:
Bob is a software developer in Manchester. His base salary is £98,000. Mid-year he negotiated a £3,000 bonus. Around the same time, he started doing some tutoring (online) earning about £5,000 net profit a year. He didn’t update his tax code, or consider how these extra earnings would affect his allowances.
When I ran his numbers for 2024/25 and projected 2025/26:
● The bonus + side income pushes his adjusted net income over £100,000, triggering a taper of his Personal Allowance.
● As a result, £1,000-£2,000 of his income was taxed at an effective rate of ~60% (because of the lost Personal Allowance + 40% income tax + NIC).
● He was also paying too much NIC in some months, due to how his employer’s PAYE system handled the bonus (lump sum) without adjusting code or thresholds.
● By adjusting his salary packaging, making extra pension contributions, and offsetting allowable expenses for the tutoring gig (declaring those properly), we reduced his annual tax + NIC bill by ~£1,800.
That kind of saving is meaningful. For many people mid-income, just a few tweaks can yield hundreds to low thousands off what they'd otherwise over-pay.
The Updated Figures & What’s New in 2025/26
In my years advising, tax changes often come quietly. Some recent ones to be especially aware of in 2025/26:
● Thresholds are frozen. The Personal Allowance, and many bands (higher rate threshold etc.), are not being uprated with inflation. This means that income increases via cost-of-living pay rises or inflation pushes many into higher tax / NIC bands. This “fiscal drag” means more people than before are paying higher rates, even without “real” real-term income increases.
● National Insurance Cuts/Reform: Employee NIC main rates remain 8% up to £50,270, then 2% above that. The employer NIC for secondary earnings has shifted: the threshold at which employers begin paying has dropped to £5,000/year (from a higher figure) and the rate is 15%. Also, Employment Allowance doubled to £10,500- worth knowing.
● IR35 tool updates: HMRC updated the Check Employment Status for Tax (CEST) tool in April 2025; one key tweak was in how the tool treats whether there is a contract and mutuality of obligation. However, CEST remains controversial, and many contractors (or clients) don’t get clarity or get stuck using a wrong status determination.
● Capital Gains / Business Asset Disposal Relief (BADR) changes: There are shifts in the rates for business asset disposals and some reliefs are being phased in/out. If you’re selling a company, or disposing of assets, or considering exit planning, these changes may bite.
First Worked Example: Employee in England/Wales/Northern Ireland
Let’s go through a sample calculation so you can follow along with your own.
Scenario: Jane works full time, 5 days a week as a marketing manager in Leeds. Her salary is £55,000/year. She also does freelance design work yielding £4,000 profit/year. She pays into a pension scheme where her contributions are £3,000 gross/year. She has no other income, no charitable giving, no side deductions. What is her tax + NIC, and what could she do to reduce it?
Aggregate income: salary (£55,000) + freelance profits (£4,000) = £59,000 gross.
Apply Personal Allowance: first £12,570 untaxed. So taxable income = £59,000 - 12,570 = £46,430 (for income tax).
Note: under £100,000, so full personal allowance applies. No taper.
Apply tax bands:
○ £12,571 → £50,270 is taxed at 20%. Jane has £46,430 taxable, which all sits in basic rate (because £46,430 < £50,270).
○ So Income Tax = 20% of £46,430 = £9,286.
NIC (Employee, Class 1):
○ Earnings up to £12,570 → NIC 0%.
○ Between £12,570 → £50,270 (which is £37,700) taxed at 8% = £3,016.
○ Earnings above £50,270 (Jane has £55,000 salary) → £4,730 taxed at 2% = £94.60.
○ Total employee NIC = £3,110.60.
Freelance profits:
○ Her profit £4,000 adds to her taxable income; she also pays self-employed NIC (Class 4) on profits above £12,570 threshold. But since her salary already covers up to that, the profits are fully above threshold.
○ Class 4 NIC rate in 2025/26: 6% on profits between £12,570 and £50,270; 2% above that. Here, the profit £4,000 sits under threshold if looked separately, but because of aggregation, effectively all freelance profits are in rate zone. (Simpler to think that the taxable and profit income combined — salary plus profits — means the salary part already used up the lower bands). Thus 6% on £4,000 = £240.
Pension contributions (£3,000):
○ These reduce her taxable income. So income for tax after pension = £59,000 - pension £3,000 = £56,000, then allowance etc. (Actually, HMRC allows tax relief on pension contributions under certain rules; this reduces income tax but not NICs). In practice this reduces her income tax bill by about £600 (20% of £3,000) since she is in basic rate.
Total tax + NIC:
○ Income tax: ~£9,286 - pension relief (~£600) = £8,686.
○ Employee NIC: ~£3,110.60.
○ Self-employed (Class 4) NIC: £240.
○ Total ~ £12,037.
What could Jane do to pay less / avoid overpaying?
● Increase pension contributions (especially via salary sacrifice) so more of income moves out of taxable band.
● Claim all allowable freelance expenses: home office, travel, materials, software etc. If she has, say, £1,000 of allowable expenses, that reduces her freelance profit and in turn reduces tax + NIC.
● Ensure the tax code reflects her freelance income (so PAYE doesn’t deduct too much up front).
● Consider charitable donations (Gift Aid) if she gives.
● Monitor whether any benefits (company car, private health, etc.) are taxed correctly or if she can mitigate them.
Digging Deeper – Reliefs, Hidden Traps, and Real-Life Fixes for UK Taxpayers
What If Your Tax Code Looks Off?
None of us loves surprises on a payslip. Your tax code is essentially HMRC’s shorthand for how much free income (Personal Allowance and adjustments) you should get before tax kicks in.
Key things to look out for:
● Emergency Codes (e.g. 1257L W1/M1): This means tax is worked out on each pay period as if it were your only pay in the year. It ignores cumulative allowances. I’ve seen this result in clients overpaying hundreds after changing jobs mid-year.
● K Codes (e.g. K385): This means HMRC thinks you’ve got benefits-in-kind (like company car, medical insurance) that exceed allowances, so they push your taxable pay UP. A K code can be correct — but sometimes HMRC keeps it rolling on long after the benefit ended.
● BR Code: Entire income taxed at 20%. This sometimes gets slapped on second jobs, but can be wrong if your first job income is below the allowance.
Action: Log in to your personal tax account and compare your code to your circumstances. If it doesn’t fit, call HMRC or update via the portal.
Reliefs That Many Miss
I can’t count the number of clients who’ve sighed when they realise they could’ve saved money years earlier with these:
● Marriage Allowance: If one spouse earns below £12,570 and the other is a basic rate taxpayer (20%), you can transfer £1,260 of allowance — worth up to £252 tax saving annually. Simple but widely missed.
● Pension Contributions: Beyond auto-enrolment, personal contributions extend your basic rate band — potentially pulling income from 40% down to 20% taxation. For high earners, they reduce adjusted net income, sometimes restoring lost Personal Allowance or avoiding the Child Benefit charge.
● Gift Aid: Same effect as pensions — extend bands and reclaim higher-rate relief. Keep receipts, especially for big donations.
● Job-related expenses: HMRC allows claims for professional subscriptions, uniforms, tools, and travel between workplaces (not commuting). A doctor paying GMC fees or a teacher paying union dues can often claim. Many never do.
● Rent-a-Room Relief: If you rent out a furnished room in your home, up to £7,500/year is tax-free. Students, city lodgers, even Airbnb guests can qualify.
● Trading Allowance: Up to £1,000/year of side income is tax-free. Handy for casual gigs or online selling.
Case Study: Sarah the Teacher & Forgotten Allowances
Take Sarah, a teacher in Bristol earning £38,000. She also tutors kids privately, earning £1,800/year. She assumed she had to declare the tutoring and pay tax — which is true. But she overlooked:
● Union subscriptions (£250/year) – allowable.
● Teaching Council fees (£120/year) – allowable.
● Mileage to tutoring sessions (50 miles/week for 20 weeks = ~1,000 miles @ 45p = £450 claim).
Her net side profit drops from £1,800 to under £1,000 after these deductions — meaning it actually fell under the Trading Allowance. She’d paid tax unnecessarily for two years. Reclaiming those years got her back ~£700 plus interest.
The High Income Child Benefit Charge – Why It Catches People Out
So, the big question on many parents’ minds: “Should we bother claiming Child Benefit if we’ll just lose it?”
Here’s the detail:
● If one partner’s income is £50,000–£60,000, Child Benefit is clawed back at 1% for every £100 over £50,000.
● At £60,000+, it’s fully clawed back.
● BUT — you still should register for Child Benefit, because it protects National Insurance credits for the non-working parent (vital for state pension entitlement).
Professional anecdote: I’ve seen families decline Child Benefit entirely to avoid the “hassle”, only for one parent (often mothers) to miss NI credits. Fast-forward 30 years, that’s thousands lost from the state pension.
If You’re Self-Employed – Spot the Common Mistakes
Now, let’s think about your situation if you’re self-employed. The potential to overpay (or under-claim) tax is even greater than for employees.
1. Not deducting all allowable expenses: I had a freelance photographer in Birmingham who was only deducting camera kit and travel. He missed:
● Home office proportion of rent/utilities.
● Website hosting, editing software, marketing.
● Professional insurance.
● Training courses directly relevant to his work.
After correcting, his tax bill dropped by nearly £2,500 that year.
2. Mixing business and personal: HMRC will disallow fuzzy claims. Keep business bank accounts separate. A takeaway pizza for friends while editing photos? No. Coffee with a client to discuss work? Yes.
3. Forgetting Class 2 NIC: Even with small profits (above ~£6,725), Class 2 NIC is due. Some clients ignore it, then later discover gaps in their NI record.
4. Missing Payments on Account: Self-employed tax above £1,000 triggers advance payments for next year (due Jan & July). Many don’t budget, get stung with “double bills”, and then over-pay interest or penalties.
Advanced Check: Multiple Sources of Income
This is where many PAYE employees slip up. Imagine you’ve got:
● A main job at £42,000.
● A side retail job at weekends earning £8,000.
● Rental income of £6,000 net.
Your employer for the second job may apply a BR tax code (20% flat). But if your total income tips over £50,270, part of that income should be taxed at 40%. Conversely, if your first job doesn’t use the whole allowance, you might overpay.
Tip: Always combine ALL incomes and run the calculation as one. Then cross-check whether PAYE deductions across jobs match the final Self Assessment.
Case Study: David the Landlord with a Day Job
David earns £48,000 as a civil engineer in Glasgow. He also rents out a flat, netting £7,000 profit. His employer taxes him as if £48,000 is all he earns — fine. But:
● The rental pushes him over the £50,270 threshold.
● £4,730 of rental profit falls into 40% higher-rate tax.
● But David’s agent deducts 20% tax at source (under the non-resident landlord scheme, as he works abroad part-time).
Result: He underpays £946 in higher-rate tax. When HMRC flagged it, he also owed interest. Had he proactively declared via Self Assessment, he could have budgeted and avoided penalties.
Rare Cases That Deserve Attention
Emergency Tax on Lump Sums: Clients cashing out part of pensions, redundancy payments, or bonus payments often get taxed at an emergency rate (assuming full annual income at that rate). Reclaim is possible, but you must apply via P55, P50Z, or P53Z forms.
Overseas Work & Double Tax Relief: If you work remotely for overseas clients, be wary of double taxation. The UK has treaties with many countries, but you must declare foreign income and claim relief properly. I’ve seen contractors pay tax abroad AND in the UK unnecessarily.
High Earners & Pension Taper: Those earning £260,000+ face pension Annual Allowance taper down to £10,000. Many unknowingly breach this and get stung with a tax charge. Professional advice is essential here.
Checklist: Am I Paying Too Much Tax?
Use this as a quick self-audit:
Do my payslips match my expected tax code and allowances?
Have I included ALL sources of income when checking bands?
Am I in danger zones (£50k+ Child Benefit; £100k+ allowance taper)?
Have I claimed Marriage Allowance if eligible?
Have I maximised pension contributions and Gift Aid?
Did I claim all allowable work-related expenses?
If self-employed, did I account for ALL relevant expenses?
Have I cross-checked PAYE vs Self Assessment for multiple incomes?
Do I know my NIC position (credits, classes, gaps)?
Did I reclaim where emergency tax applied (bonuses, pensions, redundancy)?
Business Owners, Contractors, and Wrapping It All Up
Why Business Owners Are at Greater Risk of Overpaying
Running a business means wearing ten hats at once. In my years advising clients, I’ve seen directors and sole traders overpay tax simply because they’re too busy focusing on sales, staff, or delivery to think through tax planning.
Common overpayments include:
● Drawing income the wrong way – taking everything as salary (and paying NIC at 8% + 2% plus employer NIC at 15%) instead of a salary/dividend mix.
● Not claiming all allowable expenses – from mileage claims to home-as-office costs to staff parties (£150 per head exemption).
● Missing capital allowances – such as full expensing for qualifying equipment, or annual investment allowance up to £1m.
● Forgetting R&D tax relief – still available for SMEs, though rules tightened in April 2025; rates differ for R&D intensive businesses vs standard SMEs.
● Poor record-keeping – meaning expenses that could be claimed get lost in the fog.
Case Study: Emma the Café Owner in Birmingham
Emma runs a small café. In 2023/24 she made profits of £60,000 but drew it all as salary. Her accountant hadn’t advised splitting income.
● Salary meant £4,800 employer NIC and ~£2,500 employee NIC, on top of £10,500 corporation tax.
● By 2024/25, we restructured: Emma took £12,570 salary (using her allowance), and £35,000 as dividends. She paid less NIC and only dividend tax at 8.75% (basic rate). Savings? Just over £3,200 in one year.
What If You’re a Contractor?
Contractors face unique challenges, especially post-IR35 reforms.
1. Caught by IR35 (inside): You pay PAYE + NIC as if employed, even if invoicing via a limited company. Often clients don’t adjust expenses correctly, so they lose deductions they’re entitled to.
2. Outside IR35: You can still structure income through salary + dividends. But HMRC scrutiny is high. I’ve seen clients pay hefty backdated bills after wrongly self-assessing as outside IR35.
Tip: Always document working practices — who controls your work, whether you can substitute someone else, financial risk. These matter as much as the contract wording.
Landlords & the Section 24 Trap
Since mortgage interest relief changes (fully phased by 2021), landlords can no longer deduct full mortgage interest against rental income — only a 20% basic-rate credit.
This hits higher-rate taxpayers hardest. I’ve seen landlords surprised when their “paper” rental profit (ignoring mortgage) pushes them into the 40% band, reducing allowances or triggering Child Benefit clawback.
Planning points:
● Consider transferring property shares to a spouse in lower tax bands.
● Explore incorporation (though SDLT and CGT apply).
● Claim all other allowable expenses: letting agent fees, repairs, insurance, replacement of domestic items.
Rare Business Owner Pitfalls
● VAT registration delay: Going over £90,000 turnover threshold and failing to register — HMRC backdates liability. Some clients end up repaying VAT from their own pockets.
● Company cars: Unless fully electric, benefits-in-kind tax is punishing. A client who provided himself a hybrid car assumed it’d be cheap, but the benefit-in-kind percentage was higher than expected.
● Director’s loan accounts: Borrowing from your own company without repaying within nine months can trigger an additional corporation tax charge (s455). Easy to miss.
Case Study: Raj the IT Consultant
Raj earned £120,000 via his limited company. He drew £9,000 salary and £80,000 dividends. That should’ve been efficient. But Raj also claimed £15,000 “expenses” for overseas trips, half of which were actually personal holidays.
When HMRC reviewed, they disallowed the expenses, re-classified part of his dividends, and applied penalties. His overpayment wasn’t immediate — but the mistake cost him £11,000 in back tax and interest.
Moral? Get the detail right. Keep records. If in doubt, check.
How to Systematically Check If You’re Overpaying
Think of this as your worksheet — I often give clients something like this at year-end.
Gather all income streams: Salary, self-employed profits, dividends, rental, overseas, pensions, benefits.
Apply allowances and reliefs: Personal Allowance, Marriage Allowance, Blind Person’s Allowance, pension relief, Gift Aid.
Run the tax bands: Check which income falls into which band. Don’t forget Scottish vs rest-of-UK rates.
Add NIC: Employees — Class 1; self-employed — Class 2 & 4; employers — Class 1 secondary.
Review benefits-in-kind: Cars, health insurance, etc. Are values correct?
Check for traps: Child Benefit >£50k; allowance taper >£100k; dividend allowance (£500 for 2025/26); savings allowance (£1,000 basic rate, £500 higher rate).
Cross-check PAYE vs Self Assessment: Does the tax withheld equal your calculated liability?
Look back: Did you reclaim overpaid tax from prior years (pension lump sums, redundancy, wrong codes)?
Why 2025/26 Feels Heavier for Many
Even without headline tax hikes, frozen thresholds + inflation mean:
● More basic-rate taxpayers are drifting into higher-rate.
● More families hit the Child Benefit charge.
● More high earners are losing Personal Allowance.
● More small businesses are feeling employer NIC pressure (threshold drop to £5,000).
In short: the system is quietly squeezing more out of you.
Summary of Key Points
Check your tax code carefully – wrong codes (emergency, BR, K) often cause overpayments.
Always compare against your circumstances using your personal tax account.
Include all income sources together – salary, rental, side gigs, dividends.
Splitting them across employers often hides higher-rate liabilities.
Beware the taper traps – £50k (Child Benefit) and £100k (Personal Allowance).
Reliefs like pensions and Gift Aid can help.
Claim every allowance you’re entitled to – Marriage Allowance, trading allowance, rent-a-room, job-related expenses.
For the self-employed, detail matters – missed expenses, poor records, and forgotten NIC create overpayments.
Always separate business from personal.
Business owners should plan their income extraction – salary/dividend mix, capital allowances, R&D relief.
Drawing income inefficiently can waste thousands.
Landlords face unique rules – mortgage interest relief now capped at 20%.
Plan ownership structure and claim all valid expenses.
Watch for unusual scenarios – emergency tax on pensions/bonuses, overseas double taxation, director’s loan charges.
Frozen thresholds mean fiscal drag – more taxpayers are now higher-rate or losing allowances without real pay rises.
Always cross-check PAYE and Self Assessment – don’t assume HMRC’s figures are perfect. Errors, delays, and missed reliefs are common.
FAQs
Q1: Can someone change their tax code if it’s incorrect?
A1: Yes — if the tax code doesn’t match someone’s circumstances it should be corrected; in my experience the quickest route is to check the code in the personal tax account, gather proof (P60, payslips, details of benefits), then ask HMRC by phone or via the online service; if a code change is agreed, HMRC usually issues an updated code to the employer, and any over-deduction can be reclaimed either through payroll or by an HMRC refund later.
Q2: How does someone check whether a second job is being taxed correctly?
A2: The key is to treat all income as one total — check payslips for second jobs that use BR/0T codes (which tax flat) and then compare the cumulative tax deducted across employers with an aggregated calculation; if the second job pushes total income into a higher band, request the main employer uses the Personal Allowance and the second employer applies BR only if you prefer the allowance to be split differently.
Q3: What should someone do if they were put on emergency tax after changing jobs?
A3: If they’re on an emergency code (e.g., M1/W1/X) that’s draining more than expected, they should supply the new employer with a P45 from the previous job or ask HMRC to send a correct code — meanwhile, keep payslips and, if overpaid, request payroll to refund the year-to-date overpayment or claim a refund from HMRC after the tax year ends.
Q4: How can someone spot an employer payroll error that is costing them tax?
A4: Look for mismatches between the gross pay on the payslip and the payroll-year totals (PAYE, NIC paid); warning signs are repeated small over-deductions, benefit values listed but not actually received, or employer showing student loan category when none exists — raise it with payroll first and escalate to HMRC if unresolved; keep a written timeline of calls/emails as evidence.
Q5: Can someone reclaim tax if HMRC applied emergency tax to a bonus or pension lump sum?
A5: Yes — where a lump sum was taxed at an emergency rate, they can apply to HMRC for a recalculation and refund (using the appropriate forms or online claim) once the full-year income is known; in practice this often requires submitting P60s, P45s, or pension paperwork and can take a few weeks, so keep records and follow up persistently.
Q6: What should someone check if HMRC sends a P800 saying a refund is due but payroll shows otherwise?
A6: First, confirm the P800 details against personal records (all pay, pension and taxable benefits). If the P800 is wrong, contact HMRC with evidence; if it’s right but payroll withheld too much, the P800 is the route to a refund — but be wary of scam letters claiming refunds; always confirm via the personal tax account.
Q7: How does someone tell if the High Income Child Benefit Charge applies to them?
A7: Calculate adjusted net income (all taxable income after reliefs) and check if it exceeds the relevant threshold; if it does, they must declare Child Benefit on a Self Assessment or fill in the duty-to-notify online form — even if they don’t want the payment, registering is often worthwhile to preserve NI credits for the partner.
Q8: If someone has foreign income, how do they quickly check for double taxation risk?
A8: They should list foreign income and the tax paid abroad, check whether the UK has a double taxation treaty with that country, and then use the foreign tax credit relief or treaty rules to avoid being taxed twice; keep foreign tax certificates and exact dates of non-UK work — I’ve seen contractors avoid large UK bills by producing overseas tax evidence at assessment stage.
Q9: What steps should a self-employed person take when they suspect they’ve overpaid tax on a past year?
A9: Check past self-assessment computations and supporting schedules, identify missed expense claims or reliefs, collate invoices/receipts, and submit an amendment to the return within the allowable amendment window; where the overpayment spans several years, prepare a clear reconciliation — HMRC accepts corrections but will ask for documents, so organise them first.
Q10: How can a director or small company owner check whether their salary/dividend mix is efficient?
A10: They should compare net take-home under different extraction scenarios (small salary up to the primary threshold, dividend distributions, employer pension contributions) and account for employer NICs and corporation tax; in practice, a simple model spreadsheet reflecting current thresholds and dividend allowances will show if switching increases net cash without creating future tax traps (e.g., large director’s loan issues).
Q11: What practical checks should someone do if they suspect PAYE has not captured a side-gig?
A11: Add the side-gig earnings into a combined income worksheet (salary + side income + dividends), check PAYE totals against the estimated liability, and if under-declared, register for Self Assessment and declare the income; many find that declaring small side incomes early avoids interest and penalties later and allows allowable expenses to reduce tax.
Q12: How should someone confirm whether their pension contributions are being treated correctly for tax relief?
A12: Review payslips to see if contributions are via net pay or relief-at-source, confirm the grossed-up amount appearing in pension statements, and compare the tax saved on the payslip; for higher-rate taxpayers, ensure higher-rate relief is claimed via Self Assessment if needed — I’ve had clients miss thousands because employer systems were set to net pay only.
Q13: Can someone do anything quickly if they face a surprise Self Assessment bill because of multiple incomes?
A13: Short term: check whether payments on account apply and make the balancing payment online to avoid interest; medium term: review reliefs (pensions, Gift Aid) that can be added to reduce the bill and consider adjusting PAYE code for the following year to spread payments; if unaffordable, HMRC can agree time-to-pay arrangements.
Q14: What practical signs show that IR35 or off-payroll rules might be incorrectly applied?
A14: Red flags include sudden reclassification notices from a client, a CEST or status assessment without contractual review, or being asked to work under tight supervision and set hours; if the status looks wrong, document actual working practices (responsibility, substitution, commercial risk) and challenge the determination or seek independent status review.
Q15: How can a small landlord quickly verify they’re not overpaying because of mortgage interest rules?
A15: Reconcile the rental profit shown to returns (rental income minus allowable expenses) and check that mortgage interest has been applied as a basic-rate tax credit rather than a straight deduction; if the accounting treatment seems off, request corrected computation — transferring ownership or incorporating may be long-term options but need specialist advice.
Q16: What is the quickest way to check for scam refund approaches masquerading as HMRC contact?
A16: Genuine HMRC will not ask for bank details or passwords by unsolicited email or text; if contacted, log into the official personal tax account independently (not via links) to see messages, and report suspicious contact — in recent months scams imitating refunds have risen, so cautious confirmation is wise.
Q17: If someone has unpaid tax from old years due to a missing Self Assessment, what practical steps stop fines escalating?
A17: File the overdue returns immediately and contact HMRC to explain and agree a repayment plan; if there’s a reasonable excuse for the delay, state it with evidence — waiting only increases interest and penalties, so prompt action often reduces the financial impact.
Q18: How does remote working across UK nations affect someone’s tax and where should they check?
A18: Residency and where work is performed can affect whether Scottish rates apply or whether employer payroll should use Scottish or rest-of-UK bands; the practical check is to confirm with payroll where days are worked, and if Scottish rates were incorrectly used (or not used), correct via payroll or Self Assessment with evidence of where work was performed.
Q19: What quick checks should someone run if they suspect HMRC misapplied Gift Aid or charitable deductions?
A19: Compare the grossed-up Gift Aid figure on charity receipts with the amount declared on returns or payroll (if payroll giving); if missing, gather receipts and ask HMRC to amend the tax year — many donors don’t realise correcting a year can restore higher-rate relief and reduce tax owed.
Q20: What should someone do first if they find an unexplained tax charge showing on their personal tax account?
A20: Don’t panic — check the charge details (period, reason), cross-check with employer/pension provider and recent transactions; if it’s still unexplained, call HMRC with a numbered summary of facts and ask for the calculation breakdown — keeping a calm, chronological record usually speeds resolution and avoids unnecessary payments.
About the Author
Maz Zaheer, AFA, MAAT, MBA, is the CEO and Chief Accountant of MTA and Total Tax Accountants, two premier UK tax advisory firms. With over 15 years of expertise in UK taxation, Maz provides authoritative guidance to individuals, SMEs, and corporations on complex tax issues. As a Tax Accountant and an accomplished tax writer, he is renowned for breaking down intricate tax concepts into clear, accessible content. His insights equip UK taxpayers with the knowledge and confidence to manage their financial obligations effectively.
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