Q. The Taxman has sent me a new PAYE code for 2013/14, which includes about £1000 of savings income taxed at 40%. I don't know how he got that figure as I don't have any savings, and I only draw dividends from my company up to the limit of the 20% tax band.

A. The Taxman has looked at the income reported on your tax return for 2011/12, of say £7,475 wages plus £35,000 gross dividends (total £42,475), and assumed you will continue to receive the same amounts of wages and dividends in 2013/14. However, in 2013/14 your tax free personal allowance will be £9,440 and the limit of the 20% tax band will be £32,010 (total £41,450). If you draw the same amounts from your company in 2013/14 as you did in 2011/12, you will be taxed on £1,025 at the higher rate (40% for salary, 32.5% for dividends). To avoid the higher tax rate you will need to restrict the amount you draw from your company in 2013/14, and tell the Taxman to amend your PAYE code on the basis of your estimated salary and dividends for the year.