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Provided by Mae Stewart, Editor UNISON Retired members Newsletter, Dundee, Perth and Angus.
Please note that this is not definitive information about benefits but will provide a signpost as to where to get up to date information. Please check the sources first. UNISON Scotland can take no responsibility for information that may be outdated or inaccurate.

Issue 32 September 2010

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HMRC (formerly the Inland Revenue) is currently sending out letters to nearly 6 million people who have paid the wrong amount of tax since 2008

** NB** The information on Tax overpayment/underpayment may not affect you; but I thought this would be useful information to have at hand just in case. If you do receive any correspondence from HMRC and are in any doubt call Age UK Advice: 0800 169 6565 for assistance. (Mae Stewart)

Age UKOver the past 2 years, nearly £2bn has been underpaid, with around 1.4m taxpayers owing an average of £1,400 each.

However, £1.8bn has also been overpaid, so another 4.3m people will get a rebate, because they have paid too much tax. It's thought that some people may have overpaid and underpaid their income tax, effectively cancelling any payments out.

We do not currently know how many people who receive a pension have been affected.

Why has this happened?

Previously, HMRC used to check amounts that had been paid via PAYE manually against their own records. They have now introduced a new computer system that has alerted them to the discrepancies and, as a result, millions of letters are being sent out.

The discrepancies happen when people move job, are being paid via PAYE for more than one job, or because employers are using the wrong tax code.

What do I do if I get a letter?

The first thing to do is make sure you actually read it and check all the basic details. Make sure that HMRC actually has the right information about your employment:

  • where you worked
  • dates you worked
  • how much you were earning
  • if any benefits (such as company car) are correct

What if I've underpaid my tax?

If you have underpaid, don't panic. The Inland Revenue won't expect you to pay the money back in one go. It's important to realise that what you are receiving will be an informal calculation only (known as a P800) and is not actually a tax demand.

If you don't understand the calculations, you should challenge HMRC to produce a detailed explanation as to how they reached their figures. In the majority of cases, HMRC will simply alter your tax code and you will pay more tax each month from April 2011 onwards.

Most people will pay the money back over the course of 12 months. HMRC has announced that it will not be pursuing claims of less than £300 - this applies to approximately 40% of underpayments.

What if I can't afford to repay the tax?

If paying the money back that quickly is going to cause you problems, then HMRC has agreed that payments can be spread over 3 years. If this applies to you, contact your local tax office and request this. However, if a tax debt is legally due, then you must repay it.

What if I've overpaid?

You need to be just as vigilant, if you've paid too much tax. Check the details with just as much scrutiny as if you'd been told you'd underpaid, because if HMRC discover there's been a further error, you could still be liable to repay the rebate. Once notification has been sent through, a cheque should arrive within 7-10 days.

Will HMRC send me an email about my tax payment?

No. HMRC will only contact you by letter. If you receive any email claiming to be from HMRC telling you to submit your claim online, this is a phishing scam and should be deleted immediately. More information about scams

What if I don't agree with the letter? What if I want to appeal?

Officials have indicated that there is a procedure called the 'extra statutory concession A19' (the exact text relating to this is on pages 25-26 of the document.). This procedure means that HMRC will consider writing off the demands if you can prove you provided all the correct information to calculate your tax correctly and they failed to use it within 12 months. However, you're by no means certain to escape repayment.

According to HMRC, 'In fairness to all taxpayers, this is not a blanket exemption and very much depends on the specific circumstances of each case.'

Useful website - HM Revenue & Customs HM Revenue & Customs help ensure that the money is available to fund the UK's public services. They also provide targeted financial support to families and individuals.

Visit their 'Contact us' section to enquire about taxable income. 'Your rights to money benefits'. This book pulls together all the information on the benefits you may be entitled to in retirement.

Useful publications: Download the Age UK Tax Guide, which contains information and advice about all forms of tax: Tax Guide (PDF 2MB)

0800 169 6565 (AGE UK HELPLINE)

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How to Avoid Scams

No one likes to feel that they have wasted or, even worse, been conned out of their money. Unfortunately, there are plenty of situations in which individuals acting in good faith can find that they have come off worse from a transaction.

Download free information on avoiding scams (106 KB)

Download free information on staying safe (670 KB)

We use the word 'scam' to indicate a dishonest or fraudulent scheme designed to cheat the purchaser. This can apply to buying products or services, making investments or becoming involved in apparently failsafe business propositions. You can avoid a lot of scams and bad purchases if you know what to look for.

Is it legal?

A scam can mean anything from criminal fraud to sharp, but legal, selling practices. The question 'is it legal?' is perhaps less relevant than 'can I get my money back?'. Whether the scheme was legal or illegal, the answer is likely to be no. Even well-known companies may direct you to the small print if you later query your position. Other, less reputable sellers may simply disappear.

Depending on the circumstances, police or Trading Standards are more likely to try to prevent future scams than recover money that has been lost.

Scams checklist

If an exciting offer seems too good to be true, think about the following warning signs and ask yourself if it is a scam:

  • Was the offer unsolicited?
  • Do you have to respond quickly? What's the rush?
  • Do you have to pay for a prize or 'free' gift?
  • Do you have to ring a premium rate number (one starting with '09')?
  • Are you being asked for your bank or credit card details?
  • Is the business reluctant to give you its address or contact details?
  • Are you being asked to keep the offer confidential?

Always stop, think and be sceptical before signing anything or handing over any money. If the worst happens and you are a victim of a scam, or if you want advice on how to protect yourself, contact Action Fraud Tel: 0300 123 2040 (national rate)

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Claiming all benefits: More money in your pocket

Very few of us would refuse extra money to help us pay the bills, have a more comfortable retirement and be able to treat our grandchildren.

However, many of us are missing out on extra money each week simply because we don't know what we are entitled to, or because we don't claim what's rightfully ours.

That's why Age UK has launched the More money in your pocket campaign - to help us claim all the money we are owed. Last year‚ Age UK helped put more than £100 million in unclaimed benefits in the pockets of those of us in later life and our carers‚ and we plan to do even better this year.

Age UK lets us know if we are missing out on anything‚ and can help with filling in the claim forms. There is nothing to lose and everything to gain.

For more information about our More money in your pocket campaign‚ call Age UK free on 0800 169 8787. Find out how Age UK can help put More money in your pocket, on its help claiming all benefits page.

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Age UK Energy

The Age UK group have worked closely with E.ON to create this exclusive tailored energy package. Sign up with E.ON and you can get a free energy monitor to show you ways to save electricity.

Tailored for your needs

Switch to the Age UK tariff and you could save money on your gas and electricity and benefit from great customer service. http://www.ageuk.org.uk/buy/gas-and-electricity/age-uk-energy/

Buy online This great energy deal, includes:

  • Guaranteed cold weather payment of £10* for all our gas and Dual Fuel customers, (£20 for those 80 or over). Gas customers over 60 may also receive an additional " payment based on the number of days below 0 degrees Centigrade between December and February "
  • Up to 8% discount every month for paying by fixed monthly Direct Debit**
  • Free welcome pack including a gift of your choice worth up to £20. For example, a carbon monoxide alarm "
  • Free energy efficiency advice
  • Discounts on energy saving products and services
  • You could save up to £340*** a year on your energy bills with home insulation
  • Free calls to our UK-based call centres
  • Free customer service helpline that is answered by a person not a machine

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(Apologies to AGE UK for any misquotes: Mae Stewart)