Those With Large Debts ‘Need To Get Finances Sorted’

Those finding themselves with unmanageable debt difficulties as a result of larger than expected tax bills should look to tackle such problems straight away, an industry expert has declared.

According to Rachel Fish, commercial manager for TaxDebts, a rising number of consumers are getting themselves into thousands of pounds’ worth of debt due to problems with the Pay As You Earn (PAYE) system for deducting tax from income or because they are self-employed. As a result of such difficulties, Britons could be struggling to service demands for payment on other areas of their finances such as overdrafts and loans.

Although the firm is reportedly receiving enquiries from those running up tax debts of around 70,000 pounds, Ms Fish suggested to those owing high amounts of money via credit cards and personal loans due to such constraints that organising how much they owed the government is “something really basic”. She also urged the need for consumers to divide their debts into manageable chunks as soon as possible, as otherwise they could find problems managing their money increasing. “There is a lot of burying heads in the sand – [and] like any kind of debt – you need to get it sorted. If you don’t understand you can get very bogged down in it,” Ms Fish commented.

She added that there is a need for Britons to become more accountable with their finances and to learn more about how various monetary products and schemes work. “You are responsible for your own tax – if you are hit with a tax bill then you pay it and people need to check and be educated on how the tax scheme works,” Ms Fish claimed. Meanwhile, she reported that the majority of debt difficulties stemming from those on the PAYE scheme is due to entering the incorrect code.

Her comments come after research by the Chartered Institute of Taxation – the professional body for chartered tax advisers – revealed that 47 per cent of British taxpayers surveyed never check to make sure that they have the correct PAYE code. Meanwhile, 42 per cent of respondents claim to find it either “very” or “fairly” difficult to find out if they are paying the correct level of tax. The institute also pointed to a report carried out by the National Audit Office estimating that some 5.7 million could be paying the wrong amount of tax.

And for those particularly worried that they face unmanageable pressure on their finances, taking out a personal loan for the purposes of debt consolidation could well be a wise option. However, it has been suggested that consumers could find themselves facing more stringent checks when applying for a loan which consequently could see their access to borrowing limited. In a piece by the Financial Times it was reported that loan lenders are taking a closer look at applicants’ credit history when judging their ability to make repayments. According to the publication, such moves have been made as loan providers are attempting to lower the probability that borrowers will default on payments following the recent slide noted in the global financial industry.

Leave a Reply

Your email address will not be published. Required fields are marked *