The tax body is urging people to look closely at their payslips
HM Revenue and Customs (HMRC) is encouraging people to examine their payslips for any signs of tax avoidance. The Government department explains that, while it may appear difficult to spot, a few checks can help avoid questionable schemes.
“Everyone can learn to spot the signs of tax avoidance,” HMRC posted to X, formerly Twitter. “Don’t get caught out.” Essentially, tax avoidance involves exploiting loopholes in the tax system’s regulations to secure an unfair advantage by paying reduced tax.
This might involve elaborate artificial dealings that have little or no genuine purpose beyond creating this financial benefit. Employees and freelancers working via particular ‘umbrella companies’ face a heightened risk, particularly when bosses pledge you can keep 80, 90 or 95% of your salary whilst remaining tax compliant.
Generally, this is too good to be true, given that the standard rate of Income Tax stands at 20%, with National Insurance payments also required on earnings.
Anyone discovered benefiting from a tax avoidance arrangement will be required to settle the lawfully owed tax, plus interest and a possible penalty, according to the Mirror.
“Everyone is responsible under UK law for paying the correct amount of tax,” advice on the Government’s website explains. “You’re responsible even if you have appointed someone else to deal with your tax affairs and are given bad advice.”
To protect yourself against this, HMRC guidance recommends that you examine your payslips carefully. This advice applies to both individuals on PAYE payrolls and those who complete Self Assessment forms.
Getting more money in your bank account than what appears on your payslip serves as a major red flag, alongside receiving any untaxed payments such as loans or capital advances. Crucially, the figure displayed on your payslip should always match your bank statement.
“Checking your payslips and contractual arrangements will help you confirm you are paying the right amount of Income Tax and National Insurance contributions,” HMRC adds. “Doing this will mean you avoid getting an unexpected tax bill later.”
HMRC has compiled a list of recognised tax avoidance schemes. While it’s not exhaustive, individuals can review it to determine if they are participating in any of the schemes.
“Fill in the online form to tell HMRC what you know about the person or business,” advice on the Government’s website continues. “It helps if you share your name, location and contact details. HMRC can then contact you if they need more information.
“You do not have to give your personal details. Any information you do give will be kept private and confidential.”
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