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Weekend reading: Are you one of the 1.4 million who owe HMRC an extra £1,500?

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My regular Saturday musing, followed by the links to some great articles.

Felix Dennis makes no secret in How to Get Rich about his pleasure in sending large cheques to the Inland Revenue to settle his tax bill.

An old Lefty, Dennis doesn’t mind doing his considerable bit for those who haven’t had the opportunity in life to overcome a drug and hooker addiction through poetry and tree planting.

Also, he sensibly points out that a big tax bill is a sign of success.

Most of us will do all we can to avoid paying excessive taxes and to reduce our capital gains tax bill, but at the end of the day, owing a wodge to HMRC means you’re doing something right.

However it’s one thing to pay your taxes with a clear conscience and a smile, and quite another to find you’re going to be clobbered for more taxes for a year you thought was done and dusted.

Yet that’s exactly what 1.4 million UK citizens have woken up to today. Perhaps you’re one of them, who will be hit by an unexpected bill for a cool £1,500 in extra tax payments, according to the BBC:

Nearly six million people in the UK have paid the wrong amount of tax.

About £2bn was underpaid via the Pay as You Earn (PAYE) system in the past two years, with about 1.4 million people owing an average of £1,500 each.

But £1.8bn has also been overpaid and some 4.3 million people will get a rebate because they have paid too much.

A new computer system has allowed more discrepancies to be identified, but HM Revenue and Customs said the “vast majority” of tax bills were correct.

The number of people affected by over or underpayments is also higher than usual because HMRC is currently reconciling two years of PAYE contributions at the same time, rather than just one.

Watch your postbox carefully. You could be in line for a £300 windfall, or discover you’re £1,500 poorer than you thought.

For anyone without an emergency fund that’s a lot of money to find, though I suspect you’ll be able to pay it back through an adjustment to your PAYE code for 2010/11.

And they say investing is a risky business…

On the blogs

In the mainstream media

  • The odd decouple: The US economy Vs. the world – The Economist
  • Big game conservation in Africa – The Economist
  • New homes data spells declining UK housing market – FT
  • ‘Hidden’ funds distort performance – FT
  • [IMHO doomed sounding] fund to combat volatility – FT
  • [From July] Rich biggest defaulters on US mortgages – New York Times
  • A dream [US] house after all – New York Times
  • The best country in the world? – Motley Fool
  • Time for a pension reality check – The Telegraph
  • Time to give up on Japan? Or not? – The Telegraph
  • With derisory savings rates, it’s time to take stock – The Independent
  • 50 side businesses from home – The Guardian

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{ 7 comments… add one }
  • 1 ermine September 4, 2010, 4:45 pm

    > You could be in line for a £300 windfall, or discover you’re £1,500 poorer than you thought.

    I don’t like the odds at this casino 🙁 Up one or down 5….
    .-= ermine on: Digital Taylorism – Why our Jobs are Getting Worse =-.

  • 2 Moneyedup September 4, 2010, 6:08 pm

    Paying an extra £1,500 in taxes is a considerable amount of money for those without emergency funds. This goes to show the importance of having an emergency fund, because there was no way of knowing that this was coming.
    .-= Moneyedup on: How To Protect Your Savings From The Nursing Home =-.

  • 3 The Investor September 4, 2010, 6:08 pm

    @ermine – I think the maths may be a little better than that. I just did it off the top of my head, with a hangover! 😉

    Shouldn’t really be happening at all, of course.

  • 4 The Investor September 4, 2010, 6:09 pm

    @Moneyedup – Absolutely.

  • 5 Neil Wilson September 5, 2010, 8:00 am

    “An old Lefty, Dennis doesn’t mind doing his considerable bit for those who haven’t had the opportunity in life to overcome a drug and hooker addiction through poetry and tree planting.”

    Pity that taxes don’t fund anything then. Taxation is just a way of destroying some money so we don’t get an inflation, with the side effect that it gives certain worthless pieces of paper a value.
    .-= Neil Wilson on: The reason for taxation- and what a deficit really is =-.

  • 6 Forest September 5, 2010, 12:19 pm

    Yikes! I hope they don’t want anymore from me! I have been self employed for quite a few years so will prob go unaffected…. fingers crossed.
    .-= Forest on: How to Appeal Property Tax Assessment =-.

  • 7 The Investor September 5, 2010, 2:38 pm

    @Neil – It’s nice to hear challenging views, but you could be a bit more clear that they’re not mainstream / modest, given the potentially unknowable audience on the Internet. 99.9% of people, politicians, economists, and money managers would know exactly what I mean by ‘funded by taxes’, whereas I submit your statement is from the fringes of economic discussion, and quickly disappears down a rabbit hole marked Fiat Money I imagine.

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