Taxation can be a minefield, especially if you find yourself easily overwhelmed by the amount of information available. It becomes even harder when certain aspects of that information are wrong. Avoiding misconceptions about tax is key to ensuring your peace of mind, so it pays to learn the fact from the fiction.
Here are four common tax misconceptions it's time to forget:
1. Your Tax Code Doesn't Change
Your tax code is what determines the rate of tax you pay. It's one of the most common mistakes that people make - to not double-check if their tax code is accurate. If your working hours change, you may be liable to pay a different rate of tax than you do currently - which may mean you should be registered under a different code. It's essential to confirm that you're registered under the right tax code, as you could end up paying too much or too little tax.
2. HRMC Always Gets It Right
Another misconception is that HRMC is always correct. They must know what they're doing, so there's no need for you to query anything - right? Wrong! Mistakes are made often, but many people choose to do nothing about it because they presume that they're the ones who are mistaken. This is where it pays to invest in the service of tax advisors who can double-check everything for you, to ensure that any mistakes are identified as early as possible.
3. HRMC Give Leeway For Honest Mistakes
Unfortunately, while taxpayers have no option but to be accommodating with HMRC when they make mistakes, it doesn't work both ways. There is a legal obligation present on taxpayers to ensure they take all necessary steps to file their claims accurately and on time. Ignorance is no excuse in the eyes of the law, and it's no excuse in the eyes of HRMC either. This is just another way that tax advisors make themselves an essential investment.
4. I Don't Really Need A Tax Advisor
Many people feel that tax advisors only make sense when you're above a certain level of income, or if you have very complicated financial arrangements. This, however, is not the case. Tax advisors are a sound investment for anyone, of any income, who wants to make sure they're paying the right amount of tax. Tax advisors may need only a few hours to set you right, but that peace of mind is invaluable.