Kirkpatrick & Hopes - Succession Planning Accountants

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High earner with more than one job?

HMRC has admitted its current systems cannot deal with the new 50p rate of income tax for high earners if they have more than one source of income, says the Daily Telegraph.

When the new rate took effect in April, HMRC failed to issue new PAYE codes to some taxpayers, and many company directors, hospital consultants, dentists and solicitors will receive demands for unpaid tax.

The error affects high earners with more than one job, whose combined earnings are over £150,000. The income above £150,000 is subject to the new 50% tax rate and many individuals are only paying 40% tax through the PAYE system.

The Revenue does not know how many individuals are affected. Any tax due will be collected via the self-assessment system and will be payable on 31 January 2012.

The Revenue only mentioned this on its website last month and currently cannot change tax codes to collect tax at the 50% rate.

We have a tax code called D0 that advises employers to collect tax at the rate of 40% from employees but there is currently no tax code that enables all income to be taxed at 50%. My suggestion for the new code is B0!

Please let us review your current tax position if you have more than one job and your personal income is more than £150,000 a year.

We may be able to suggest some planning points to you save tax and at the very worst you will become aware of the extra tax you owe now as opposed to receiving an unexpected bill.

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