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March 6, 2009 7:01 pm
Investors who have lost money in the past year could find themselves paying too much tax this year.
Higher rate taxpayers who receive additional income from pensions, shares or other investments have been advised to check their personal tax code for 2009/10 carefully, and contact HM Revenue & Customs if they think it is wrong.
John Whiting, tax partner at PricewaterhouseCoopers, says taxpayers could be paying too much on PAYE if their investments have fallen in value.
“The Revenue will assume additional returns from investment are the same,” he explains. “But if your circumstances have changed, you could be in the wrong tax code and be paying too much.”
PAYE codes are used by employers or pension providers to make sure individuals pay the right amount of tax and get the correct allowances.
The code determines how much tax-free income is permitted. For more information on PAYE codes go to: www.hmrc.gov.uk/incometax/codes-basics.htm
Cracking the code
L – Eligible for basic Personal Allowance
P – Aged 65 to 74 and eligible for full Personal Allowance
V – Aged 65 to 74, eligible for full Personal Allowance and full Married Couple’s Allowance
Y – Aged 75 or over and eligible for full Personal Allowance
T – Items HMRC still needs to review
K – Total allowances are less than total deductions
BR – Second source of income
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