HMRC letters to detail exactly how your tax is spent

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%VIRTUAL-SkimlinksPromo%24 million people will receive a tax statement explaining how their contributions have been spent, from later on this year.

Chancellor of the Exchequer George Osborne has announced that from October this year around 24 million people will receive a personal tax statement from HM Revenue & Customs, which will detail exactly how much tax they paid in the previous year, and how it contributed to public expenditure.
The idea was first raised in the 2012 Budget, though the number to receive the letters has grown by four million in that time.

Osborne said: "These tax statements represent a huge boost for tax transparency, showing people very clearly how much tax they pay and giving them a better understanding of where their money is spent."

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Example statements

The Treasury has released examples of what the statements could look like; in one of these, the statement shows that someone who earned £15,000 in the 2013/14 tax year would have paid £1,981.76 in tax and NI contributions – revealing that for every £1 of income, 13 pence was paid in tax and NI.

Over the page, the report breaks down that £1,981.76 to show how much was spent on welfare (£447), health (£367), State Pensions (£298), and so on.

16 million PAYE taxpayers who received a tax coding notice from HMRC for the 2013/14 tax year, plus eight million taxpayers who complete self-assessment returns online will receive the statements. Any taxpayer who does not receive a tax statement can use HMRC's tax calculator to estimate their tax bill and their contribution to public spending.

In addition an app can be downloaded for free from the Apple store or Google Play by searching for the 'HMRC Tax Calculator'.

Will these letters make Government spending more transparent? Do you want to know how your tax money is spent? Let us know your thoughts in the comments box below.

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HMRC letters to detail exactly how your tax is spent

If you wear a uniform of any kind to work and have to wash, repair or replace it yourself, you may be able to reclaim tax paid over the last four years. For some people, this could mean a windfall worth hundreds of pounds

The interest you receive on savings accounts (with the exception of cash Isas) is automatically taxed at a rate of 20%.

Higher-rate taxpayers therefore tend to owe money on the interest they are paid throughout the year. If, however, you are on a low income or not earning at all, you should be able to claim all or some of the tax deducted back

You can apply for a refund of vehicle tax if you are the current registered keeper or were the last registered keeper of your vehicle that no longer needs a tax disc

If you pay tax on a company, personal or State Pension through PAYE (the system employers use to deduct tax from your wages), you may well end up overpaying

There is a limit to the amount you need to pay in NI, whether or not you work for an employer.

Instances in which you may find that you have overpaid include if you work two or more jobs and earn more than £817 a week and if you move from self-employment to employment, but continue to pay Class 2 National Insurance contributions


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