Specialist help for older people with tax problems
30/04/2008
If you are encountering tax problems, there is an organisation that can help: Tax Help For Older People (TOP) are specialists in helping older people deal with tax issues.
TOP has a team of over 545 volunteers available herever you live in the UK and one probably lives near you. Meetings can be arranged face to face meeting, or by telephone or post. TOP is provided by Tax Volunteers, an independent organisation, to make free professional advice on personal tax available to older people who could not otherwise afford to pay for it.
TOP's latest case study involves a pensioner who failed to benefit from the 10% band - worth around £200 a year. Although this tax band was abolished for earnings and pension income from 6th April 2008, it will still exist for savings income. This case also demonstrates the inconsistency in current HMRC practices - namely, why should a tax repayment be issued to a customer one year, entirely unprompted, but not for subsequent years?
Mrs B, aged 70, came to TOP to check she was paying the correct amount of tax on her income. She works part time in order to supplement her income, which otherwise consists of the state pension and a small occupational pension. Mrs B’s main source of income is her part time job, which pays her just over £5,000 a year. But HMRC were treating her occupational pension of around £2,500 a year as her primary source of income. Due to the way in which PAYE Codes were then allocated, she was paying too much tax each year by not receiving the benefit of the 10% band (paying tax on all her earnings at 22%).
HMRC had reviewed her records for 2003/04 without being asked and issued her a repayment of £102. Since then, Mrs B had received PAYE Coding Notices from HMRC but nothing else. The TOP volunteer advised Mrs B that she was due a total tax refund of £420 for 2005/06 and 2006/07 and helped her send her claim off to HMRC. She may also have been due a repayment for 2004/05 but she was unable to locate her P60s; so HMRC were asked to review her records for that year.
This happened because HMRC systems are not rigorous in producing annual reviews and when a review does take place it is done in the context of a single year. HMRC should have taken the opportunity when they found the overpayment for 2003-04 to check the correct allocation of codes for the following year to ensure the overpayment did not recur - but they did not. Pensioners can never assume that HMRC will act in their best interests and it is always wise to challenge something that you do not understand.
For situations such as Mrs B, this problem will resolve itself from April 6th 2008 due to the abolition of the 10% tax band on earnings and pensions income.
TOP are pressing HMRC to look carefully at the reasons for overpayments in 2007-08 and automatically go back and adjust all previous years. Similarly we are asking for them to ensure that going forward the same error is not replicated.
If you have any queries, contact TOP on the helpline on 0845 601 3321, or write to: TaxHelp for Older People at Pineapple Business Park, Salway Ash, Bridport, Dorset, DT6 5DB. E-mail taxvol@taxvol.org.uk or visit the website below.