Why Am I Still Asked To Pay More Tax Every Year?

BoGoF

Johnjdc said:

BoGoF said:

Johnjdc said:

I believe that by default the fact that £100k to £125k is randomly taxed at an effective rate of 60% is not factored in by most PAYE processes, so you will end up owing 20% of whatever you earn between those numbers.

You believe wrong. If the estimated income is accurate then the restricted personal allowance will be calculated correctly and the correct code operates.

Fair enough. The HMRC forums are littered with people for whom this has not happened.

I would speculate the reason for this is lack of interest in their tax affairs........until they are hit with an underpayment. There seems to be a myth in this country that 'my employer takes care of my tax'. People need to be more pro-active, it's your tax affairs. And the panic that sets in when asked to complete a Tax Return! Good job they don't live in a country where the requirement is for everyone to complete a tax return regardless of circumstances.

It certainly bewilders me that someone earning £100k+ struggles to complete a fairly simple form.

Dazed_and_C0nfused

BoGoF said:

Johnjdc said:

BoGoF said:

Johnjdc said:

I believe that by default the fact that £100k to £125k is randomly taxed at an effective rate of 60% is not factored in by most PAYE processes, so you will end up owing 20% of whatever you earn between those numbers.

You believe wrong. If the estimated income is accurate then the restricted personal allowance will be calculated correctly and the correct code operates.

Fair enough. The HMRC forums are littered with people for whom this has not happened.

I would speculate the reason for this is lack of interest in their tax affairs........until they are hit with an underpayment. There seems to be a myth in this country that 'my employer takes care of my tax'. People need to be more pro-active, it's your tax affairs. And the panic that sets in when asked to complete a Tax Return! Good job they don't live in a country where the requirement is for everyone to complete a tax return regardless of circumstances.

It certainly bewilders me that someone earning £100k+ struggles to complete a fairly simple form.

Absolutely spot on!

kuratowski

BoGoF said:

It certainly bewilders me that someone earning £100k+ struggles to complete a fairly simple form.

I agree.  Although £100k is not what it was.  If the £100k threshold had been increased in line with inflation, it would be about £147k by now.

Johnjdc

BoGoF said:

Johnjdc said:

BoGoF said:

Johnjdc said:

I believe that by default the fact that £100k to £125k is randomly taxed at an effective rate of 60% is not factored in by most PAYE processes, so you will end up owing 20% of whatever you earn between those numbers.

You believe wrong. If the estimated income is accurate then the restricted personal allowance will be calculated correctly and the correct code operates.

Fair enough. The HMRC forums are littered with people for whom this has not happened.

I would speculate the reason for this is lack of interest in their tax affairs........until they are hit with an underpayment. There seems to be a myth in this country that 'my employer takes care of my tax'. People need to be more pro-active, it's your tax affairs. And the panic that sets in when asked to complete a Tax Return! Good job they don't live in a country where the requirement is for everyone to complete a tax return regardless of circumstances.

It certainly bewilders me that someone earning £100k+ struggles to complete a fairly simple form.

Yes precisely. They take PAYE to mean literally that.

The first time I had to complete a tax return I was surprised how straightforward it was given the meal some people make of it - although this year I had a nightmare trying to find the right place to code taxable redundancy. The phone line was less than no help...