Simon Read: Revenue's error continues to give problems to taxpayers

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The Independent Online

The tax code cock-up by HM Revenue & Customs continues to produce victims some months after the original mess when tens of thousands of incorrect tax coding notices were sent out. While many taxpayers were quickly alerted to the mistake by the publicity it generated or because they were sent a number of different codes making it obvious something was wrong; others – especially the elderly – may have failed to realise that there was a major problem.

According to lawyers Adams & Remers, many cases are only now coming to light. Stuart Jessop, tax adviser at the law firm says: "I have had many elderly clients, who are only just finding out now that their tax code is wrong or missing. What is particularly worrying is that many of them would have been either overpaying or underpaying tax due to the wrong code and would therefore have had either to claim a refund of overpaid tax or pay a large amount of tax back at the end of the tax year."

He warns that in addition, some tax may have ended up being paid nearly a year before it is actually due because the tax authorities tried to include higher rate tax liabilities in the coding. People should check their tax code or that of the person whose affairs they are responsible for and make sure it is right.

A clear sign of a problem is if there was a significant change in the amount of tax deducted from regular payments between March and April. The good news is that there is no time limit within the tax year as to when the code can be queried or changed. If you are uncertain about whether your tax code is right, phone the HMRC helpline on 0845 3000 627. People aged over 60 with a household income of less than £17,000 a year can get free advice from TaxHelp for Older People on 0845 601 3321.

LAST WEEKEND saw a record number of cash withdrawals through the nation's hole-in-the-wall machines. Friday 30 April was the busiest day ever for LINK cash withdrawals with £590m withdrawn, beating the previous record, set last Christmas Eve, by £25m. More than £1.5bn was withdrawn by the end of the Bank Holiday weekend, an increase of 9 per cent on the same period in 2009.

So what? It shows that cash is still popular with Brits, despite the constant encouragement from the banks and credit card companies for us all to switch to plastic. Millions still rely on cash to pay, whether it's because they prefer the feel of the folding stuff or simply want to keep a handle on their spending by only using the cash they have in their pocket or purse.

That's why it's important that we do fight for the right to keep cash. Despite the claims of the plastic card industry, cash is still the most convenient way to pay. And while contactless cards do have advantages – not least cutting down on queueing times in shops – having actual money is reassuring. It is too easy to overspend on plastic, whether you use a debit or credit credit or even one of the new contactless ones. With cash you can still see how much you've spent, and whether you're close to overspending, which means you keep control.

It is an old saw that if you look after the pennies, the pounds look after themselves, but it still has a ring of truth. The more you use cash, the more you notice your spending habits and the more you're likely to control them. Getting into good spending habits is the first step towards controlling your finances so flashing the plastic a little less can really be a good idea for all.

Retirement savers lose tax benefits

pension savers are missing out on an extra £742m tax relief by not making additional pension contributions, according to Karen Barrett of advice site

"Failing to save for retirement has become an increasing problem for the UK population," she warns. "The financial meltdown experienced over the last two years further compounded this problem, as the value of people's pension funds has decreased. And furthermore, people have put off saving for retirement as their day to day money worries have taken priority."

Higher rate taxpayers who are members of their employers' occupational pension scheme will miss out on the extra cash this year by failing to make additional voluntary contributions, says Barrett. AVCs allow employees to pay extra into their pension and benefit from the same tax relief as contributions paid into the main pension scheme. "So it makes sense to benefit from this tax-efficient way of saving for retirement," she says.

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