Tax and Rebate Advice
Being a tax savvy worker in the UK can help majorly in being sure you are getting your just desserts at the end of each work year. A bit of history and explanation of how the most common laws and systems within this system can go a long way in ensuring this. Taxation in the UK revolves around making payments to at least major levels of the government, that is Her Majesty’s Revenue and Customs (HMRC) or the central government, the devolved national governments, and your local governments. Meaning the vast majority of taxes come from the income tax, national insurance contributions, the value added tax, and fuel taxes going towards the HMRC. The rest tends to be distributed outwards towards the other two branches with fees from on-street parking and other minor taxation creating the majority of revenue for the national and local governments. For the vast majority of workers all of this is done automatically by their employer using the pay as you earn (PAYE) system.
Uniform Tax Refund from HMRC
The idea of the PAYE system came about with the goal of collecting income tax without the with holdings and the complicated HM Revenue Tax Refund that is required in such a system. The idea of the PAYE system was piloted by Churchill’s chancellor, Sir Kingsley Wood, in 1941 to replace their current annual and half-yearly tax collections. This was due in part of a lack of resources available during the war, to avoid inflation, and still be able to finance the fights. In addition to this 1941 saw the first time that the majority of the British population were liable for taxation, with a swathe of 2,000,000 new tax payers who had never had to pay taxes before were introduced to the economy. Efficiency was always the goal, and insofar it has been quite good at it. Very little government spending is involved in an automatic system like this, and for the majority of working-class people this works quite well. However, there are many caveats to this system for anyone whose work life may be a bit more complicate than the standard.
All salaries and other forms of compensation are required to use the PAYE system, which keeps a tax code for each worker and withholds their earnings according to what has been reported by their employer. However, not all workers affairs are easily tracked with this system and being on the lookout for certain key factors such as those in the P87 form can help one lower the burden of taxation upon themselves if properly filled out.
Though the PAYE system has for the most part made tax returns redundant the P87 form should be properly filled out for employees who need to purchase their own equipment, gas, uniforms, and many other items required for their employment. The Uniform Tax Rebate, for instance, is included in these forms and should be filled out at least once to be sure that their tax code is reflected with the fact that you are paying for the upkeep of a required work uniform. These uniforms can range from simple logoed t-shirts at a retail job to hospitality staff to Police officers, this is a very broad category often overlooked and results in a decent chunk of lost revenue to many workers. After filing for this relief, one’s tax code should be updated and not have to be used again. Your first filing may be used to include the past 4 years of wearing a uniform at the same job.
How to get a Tax Refund claim on uniforms and Mileage?
Another commonly overlooked category available within the P87 is the approved mileage allowance payment (AMAP) wherein if you have to travel for your business and are not compensated by your employer there are tax reliefs built in that should be taken advantage of based on the amount of miles traveled. The relief is split between the first 10,000 miles and anything above 10,000 miles at different rates, which can help majorly with the burden of gas consumption throughout the work year. An accurate account for all miles during business travel is required, and many use GPS and phone apps to help keep track of this.
Beyond all this, for those that are self-employed in the UK there is still a need to keep track of their tax records. If you’re running a business of any kind that is support you in some way, selling goods and services or trading on your own, or have started your own limited company, then you are considered self-employed in the eyes of the HMRC. If you fit within one of these broad categories then one must register as self-employed to the HMRC and keep records of your business income and outgoings, and pay your taxes each year usually in 2 payments.
There are many websites like https://www.simpletaxrebate.co.uk/uniform-tax-rebate/ and software available, and even recommended by the HMRC, to help with this to ensure a correct tax rate for employees and to ensure proper taxation from the self-employed. Inaccuracies within these forms can be two-fold, if in the governments favor then you are wasting your own money however if it is in your favor large fines and interest will be incurred until payed off. This is where professional website and software help comes in, they range from help with the P87’s AMAP and Uniform Tax Rebates to full taxation software for the self-employed and business owners. These can simplify the process greatly and lead you into rebates that you may never have even guessed could be incurred onto you.
All in all the UK’s PAYE system creates a majorly streamlined process for the workers of the UK so they do not need to worry about their own taxes as much as in the past, with modern updates to the system occurring at regular intervals to keep up with the changing times. However, it is worth it to be aware of such exceptions to this rule such as the P87’s Uniform Tax Rebates, AMAP, and the complications that can be incurred to those working outside of the standard 9-5 shift.