tax bill

treaclesoldman

hi folks this is my first posting so please go easy on me,my wife is on a couple of disability benefits following an accident at work 11 years ago,she has just recieved a large tax bill for mis calculated tax (just like many thousands of others) the tax people are saying that it is down to one of the benefits she recieves,is there any way of appeal against this or will she have to pay the back tax....i don't get how she could have done this as tax is taken before she recieves her benefits....many thanks

sunnyone

treaclesoldman wrote: »

hi folks this is my first posting so please go easy on me,my wife is on a couple of disability benefits following an accident at work 11 years ago,she has just recieved a large tax bill for mis calculated tax (just like many thousands of others) the tax people are saying that it is down to one of the benefits she recieves,is there any way of appeal against this or will she have to pay the back tax....i don't get how she could have done this as tax is taken before she recieves her benefits....many thanks

DLA is not taxable, IB is if you claimed it after 1995, I dont know about IIB, which benefit has she not paid tax on and how was the mistake made?

treaclesoldman

sunnyone wrote: »

DLA is not taxable, IB is if you claimed it after 1995, I dont know about IIB, which benefit has she not paid tax on and how was the mistake made?

i haven't a clue how the mistake was made,i just assume that it was part of the whole tax underpayment problem that many people are getting billed for at the moment,the tax people said it was due to underpayment of tax on her ib,but this is taxed at source,so i don't get how it was underpaid.

jetta_wales

Could it be because of any earnings in the same tax year that she claimed incapacity benefit for?

treaclesoldman

jetta_wales wrote: »

Could it be because of any earnings in the same tax year that she claimed incapacity benefit for?

She doesn't work since her accident,she's been medically retired by her company and recieves a little bit of pension...which she is taxed on

jetta_wales

But if she worked and then gained IB within the same tax year then she may need to have paid more tax on the IB because of earning previously but still within the same tax year? If there's a small pension too then that could be three taxable incomes within the tax year that her accident happened. Have you rung them to ask for a more detailed breakdown of how the amount owed was accrued?

soolin

Although tax is taken at source from the pension and the taxable benefit there may be a mistake in the coding. You only get one set of personal allowances but quite often a code reflecting those allowances is issued incorrectly to two income sources resulting in an underpayment.

Check the PAYE codes being used to ensure that only one set of allowancesis being given. If th eunderpayment is correct then your wife will of course need to repay it and fairly quickly, and it may well be worth contacting hMRC as soon as possible to negotiate a repayment plan.

treaclesoldman

many thanks for all your replies

sunnyone

skcollobcat10 wrote: »

I was wondering, at the time your wife had her accident did she at any time later receive compensation for her injuries?

The reason I ask that was that I had an accident at work, the company and the solicitors eventually paid out 6 years later to me.

Before I got my compensation, the benefits office had to be paid back for a maximum of 5 years so that I was not doubly compensated. The figure was approx £17,000 which was paid back to the benefits office. It was the job of the solicitors to do this and not me, I only had to check every year how much benefit I was being paid so that they could do a running total at the end.

I paid well over £10k to the compensation recovery unit from my accident compensation but as you say its taken before you get near the money because the solicitor has to send the CRU a form telling them what you are being awarded and then they send the bill back to the solicitor who than pays the bill.

I think that is wrong to reclaim DLA from compensation awards because your still disabled and DLA isnt income but is to help with the extra costs of disability.

Bootsalebargains

We have the same problem. My husband stopped working in 2003 but receives an insurance policy from his works also gets Incapacity benefit. We have had a letter saying we owe them £1100 for the last year.
I phoned them up they said we never notified them of the insurance policy and we should have paid more tax on it than we were. i gave them the exact date I told them which was back in 2003 as I make sure I write all dates down. They admitted it was their error that the hadn't acted upon the information given and we haven't paid the correct tax for 8 years but they are still allowed to claim the tax back for the last 12 months but nothing before that.
I have written and complained and got no where

jetta_wales

sunnyone wrote: »

I paid well over £10k to the compensation recovery unit from my accident compensation but as you say its taken before you get near the money because the solicitor has to send the CRU a form telling them what you are being awarded and then they send the bill back to the solicitor who than pays the bill.

I think that is wrong to reclaim DLA from compensation awards because your still disabled and DLA isnt income but is to help with the extra costs of disability.

But monetary compensation is to pay for the extra costs you now have due to the dissability or injury you have incurred. I do however disagree with it when the condition caused is likely to be long term or permanent (as in your case).