HMRC Pay As You Earn Tax Scheme Overview

If you have lived and worked in the United Kingdom for any amount of time, then you likely already understand the basics of how taxes are collected by HMRC. For those who have just relocated to the UK, or are entering the workforce for the first time, you will want to read over the following information pertaining to how taxes are taken from your pay. Information for self-employed individuals is provided as well.

Tax collection is just one of the responsibilities help by HMRC. Others include overseeing the national minimum wage and distributing certain financial benefits. The PAYE (pay as you earn) scheme is in place, and this means that taxes are collected from worker paychecks. This is done automatically, and the amount taken depends on several factors, such as the amount earned and the number of dependents that the worker has. Your employer should ask you to fill out tax forms upon becoming employed, and you will need to enter dependent information.

Tax refunds are the result of over payment. It is possible to pay too much tax if calculations or incorrect, or you claim the incorrect number of dependents. If you notice an error at any time during the year, you can request that a change be made. Some are perfectly fine with over paying, preferring instead to receive a lump sum refund when the tax year is over and tax reports are filed. The choice is up to you, but there are of course certain rules that must be followed. Contact HMRC if you have questions.

What if you are self-employed? In this case, you are responsible for paying into the tax system. Call HMRC if you need help with determining the correct amount to pay, or need information about how and where to submit payments. Failure to make payments, or paying the incorrect amount could result in receiving a tax bill that will need to be paid. To avoid this problem, speak with someone at HMRC and request the information needed to keep your tax matters in order.

Taxes are simply a part of life, whether you like that fact or not. Paying them as instructed is the easiest way to avoid problems. The PAYE scheme makes this extremely easy to do. Provide the correct information on the tax form provided by your employer, or contact HMRC if you are self-employed to set up the correct payments based upon your income.

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