One of the best feelings for the tax return submitter is that the tax has finally been submitted and no error is found in the record and procedure. The potential burst occurs when one receives the tax bill. However, there are several people who are worried about the fact of high bills and tend to ask the professionals the reason why their tax bill is so high. This guide will help you to develop an understanding of the expected reasons for the increased tax bills and what the scenario can be if you do not pay the tax bill. Let us get further delved into the discussion to know additionally.
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Why Your Tax Bill Might be Higher than Expected?
The best thing you can do after receiving the higher tax bill is to keep yourself calm and focus on the solution rather than the problem. Sometimes you even look at the figures and can not identify whether they are correct. On the other hand, there can be some possible errors that can be a part of the filing procedures. Below are the expected possible problems and related explanations that will help to figure out what can be the problem in filing the tax returns.
1. You Calculated it Wrong
There is no need to panic if you have made errors in the calculations. At times there is an error in the calculation and sometimes there are some expenses on the spreadsheet that is misread. This becomes one of the reasons to get tax bills that is not according to your expectations. You can even go to an expert that can help you to figure out the problems with your numbers and how they can cause the problem in your tax bills. You must ensure the payments are cleared in this regard and keep the changes updated in the rates of NI.
2. You Forgot to Include Your Employment Income
Not including employment income is a common mistake. People tend to consider the main income or the main source of employment when they’re doing their self-assessment tax returns. Most of the time, this main source of income is taxed through the PAYE system. It is because of the mistakes that are made due to the income that is not declared to HMRC. Mostly side gigs are included in such mistakes which becomes a reason for the unexpected tax bills. So it is better to get the income declared to HMRC whether is related to the main income source or the side gig income.
3. HMRC’s Records aren’t Accurate
This is quite possible with the records of HMRC to have an issue with the numbers. This happens in the scenario when the records are not updated and the tax bill you receive is higher than you expect it to be. So it is imperative for you to immediately get in touch with HMRC and update your information if you have changed your employment status or you have recently started earning through a side gig. Otherwise, you will have to go through the struggle of fines and penalties. It is best to find out the problem and find out what is the possible solution to the issue.
4. You’re on the Wrong Tax Code
The wrong tax code is one of the common problems to receive a tax bill that is higher than your expectations. It is one of the problems that are also hard to identify as well. So it is best to be aware of the tax codes to avoid errors and face the struggle of fines and penalties. In case of the wrong tax code, the best one can do is to get in touch with HMRC. Your tax code matters a lot in getting your tax bill. Your tax code is given on your payslip, form P45, and P60. You can even get in touch with HMRC to get the information.
5. You have Multiple Streams of Income that You didn’t Include
If you have multiple income streams, you must add all the information to get the right tax bills and no errors made in this regard. This is because of the fact that HMRC will get to know about all the possible streams that are being used for your income. So get in touch with HMRC about your multiple income streams and employment status if you have recently made a change.
The Bottom Line
Now that you have gathered a fair amount of information about why is my tax bill so high in the UK, we can bring the discussion towards wrapping up. Getting a higher tax bill is the last thing anyone wants after the tax returns are submitted. There can be a number of possible reasons to make such mistakes. This is better to be conscious to avoid these mistakes so that you do not have to face any struggle with penalties and tax fines in the future.
Disclaimer: The information provided in this blog is about why tax bills are so high in the UK, including the text and graphics, in general. It does not intend to disregard any of the professional advice.