help!! tax demand

homealone_2

i have been off sick and claiming dla for the last 7 years. i was also claiming incapacity benefit and receiving a income protection plan payments from my employer. this all amounted to an annual income of £9500. have never received a tax bill and so assumed i didnt have enough taxable pay to warrant it. however, a few days ago i received 2 tax bills one for 2008-2009 for £653 and one for 2009-2010 for £740. the only difference to my circumstances over these 7 years was that my husband left me in 2008. can this be a coincidence or is it to do with that? i rang them up and the man i spoke to was very unhelpful and just said the facts were right and he had no idea why i had not received a tax bill prior to this but he could look into it if i liked and he could perhaps find money due in other years, so keep your mouth shut basically. i dont have this money!! i am already paying £56 a month for overpaid child tax credit. can anyone throw any light on why these may have come now? is it something to do with my husband leaving? any help gratefully received

Gertie_Walker

As the tax affairs of husbands and wives are entirely separate its very unlikely to be anything to do with your separation. More likely it is the HMRC new computer system which is now tying up the tax records of everyone with two or more sources of income.
Ignorance is no excuse unfortunately where tax is concerned and, assuming you can agree the figures, this demad will be correct. I assume they intend to collect the tax due through your income protection plan (assuming you are still receiving this). If this will cause you hardship, then you need to write to the tax office setting out all your income and outgoings and offering to pay it over, say 3 years.
If the ICP money has now ceased and you are only on IB, I would keep quiet about it as they will hold the tax due until you start work again.

withabix

See Question 17 onwards of the following link:

http://www.hmrc.gov.uk/individuals/taxexemption.htm#4

Tax is due on the payments because they were an employer's scheme.

Were the payments made via PAYE (employer's payslip) or some other way? Was tax deducted at source?

Some benefits are also taxable. It is likely that the comination of the payments from your employer and your benefits were not taxed correctly, due to you not making HMRC aware of all of your income surces.

chrismac1

Please post the details here for a check. Disability living allowance is non-taxable for a start. Incapacity benefit is normally taxable but there are some exceptions, I don't have the detail to hand.

What I can tell you is that one of my clients was the victim of an extremely aggressive attempt to tax him on invalidity benefit which he began receiving before April 95 and which is therefore not only non-taxable but also never will be.

I got HMRC to pay back all the tax he'd wrongly paid after being harrassed by 8 - yes eight - different tax offices.

So the first step is to post up the numbers - including the form of incapacity benefit - and let's see if we can spot a "howler" in there just as with my client.

chrismac1

ITEPA 2003 s676:

any increase in incapacity ben in respect of a child is non-taxable.

The other non-taxable exclusion does not apply if you've been recieving it for > 6 months

johnsmi

chrismac1 wrote: »

ITEPA 2003 s676:

any increase in incapacity ben in respect of a child is non-taxable.

The other non-taxable exclusion does not apply if you've been recieving it for > 6 months

Thanks for this info Chrismac1. I have started a new thread about this, since I dont want to hijack the op thread, would be grateful if you or someone else might have a look. Many thanks

John