Published in on Wednesday, April 15 2009 by Ideal Debt Solutions
If you’re keen to make the most of your money in order to ensure that you can keep up with monthly expenses and stay out of debt, you will want to check that you are paying the right amount of tax and you can do this by checking your tax code. Paying too much Income Tax is an unnecessary drain on your finances, so it is really important to make sure you are paying the exact amount that you need to pay at any given time. Luckily, it is very simple to check your tax code, which is used by your employer to work out how much tax to deduct from your pay, if you are currently employed or get a company pension (or both).
You will be able to find your tax code on your pay slip but it also appears on Pay As You Earn Coding Notices, P60 forms, and P45 forms (which you will get when you leave a job). Make sure the letters and numbers which make up your tax code are correct, particularly if you have recently changed jobs. You will be able to work out your total income per year prior to tax deduction by multiplying the number which appears in your individual tax code by 10. The letter in the code describes the way in which the number should be altered. For instance, the letter Y indicates an individual who is over the age of 75 and eligible for the full Personal Allowance.
It is very important to report any changes which might impact upon your tax code, to ensure that you are not paying more than necessary. These changes include getting married, or indeed getting separated (these rules apply if you or your partner were born before April the 6th 1935) or if you start receiving a second income. If you think you may be paying the wrong amount of tax it is important to submit an official notification as soon as possible. This really is worthwhile because you could receive a nice little tax refund, which will go down well when the monthly water bill pops through your letter box!
If you’re struggling to understand tax issues of any kind, or are failing to cope with personal finance problems, seek impartial and honest advice about debt management.