Inland Rev and Tax Code Change

[Exigeowner]

I pay myself 24 K per year and the rest in Dividends if we make a profit.

On my pay slip that my accountant prepares for me I got 700 instead of the usual 1500 after asking im informed that they have changed my tax code to offset some of the dividends that I am claiming,

Can they do this, I always pay the tax owed on dividends on time, I will now need to drawn more each month just so I have enough to live on as well as paying a load more tax on a monthly basis rather than the payment method I have had for last 5 years with the inland rev.

[prostang]

I had this last year they gave me a -7000 tax code, my accoutant just said to them there may not be a dividend this year and they changed it back to my normal code

[Eric Mc]

There is an option whereby self assessment tax liabilities can be collected trough your tax code. It is an option only and it should only ever be activated by ticking the appropriate box on the tax return. If you prefer to pay your self assessment tax liabilities directly, you are perfectly entitled to do so. All you need to do is inform the Revenue that you do not want your coding messed about with.

[Ade355]

Eric Mc said:

There is an option whereby self assessment tax liabilities can be collected trough your tax code. It is an option only and it should only ever be activated by ticking the appropriate box on the tax return. If you prefer to pay your self assessment tax liabilities directly, you are perfectly entitled to do so. All you need to do is inform the Revenue that you do not want your coding messed about with.

With this method dont you just have to pay the 'on account' amount for the dividends half up front (and pay interest if you reduce it, but the liability is still there) ?

[Eric Mc]

No.

The default setting is that you WILL pay the extra tax AND the Payments on Account (if they are due) by cheque or bank debit. You actually have to instruct the Revenue to collect the tax through the tax code.

It seems to me that perhaps the accountant in this case has actually instructed the Revenue to collect the self assessment tax throiugh the PAYE system.