Over eight million Brits received a cash payment worth hundreds from HMRC after they overpaid tax.
According to data obtained through a Freedom of Information (FOI) request from the Sun, HMRC refunded £ 8.3 billion in overpaid tax during the 2022 – 2023 tax year. This means that, on average, each worker received around £943. However, it is important to note that some people will have received more and some much less.
These figures are the most recent available from the tax office, and HMRC will confirm figures for the 2023-24 tax year later this year. The main reason for the overpayments was down to people being on the wrong tax code. Tax codes are made up of a series of numbers and letters and are assigned to you by HMRC based on the information it has on your income. The code dictates how much of your income is taken in tax, and everyone who is paid through PAYE has one.
The most common tax code is currently 1257L, and this is used if you have one source of income – either through a job or pension. The numbers represent how much you earn tax free, which is just the personal allowance and the letters relate to a taxpayer’s situation and how it alters the personal allowance. Those with this tax code can earn £12,570 a year, which is currently the standard personal allowance, before paying income tax. Tax codes start with an “S” in Scotland and a “C” in Wales.
Have you managed to claim money back from an incorrect tax code? Let us know: levi.winchester@reachplc.com
Research from Canada Life from last year revealed that almost a third of UK adults who had checked their tax code have found they’d been on the wrong tax code at some point. You could be put on the wrong tax code if you start a new job, and it was put down incorrectly. You could also be put on the wrong code if you didn’t give your employer enough details about your circumstances or if you’re working more than one job at a time.
But if you are unknowingly on the wrong tax code, you could be paying too much each month. The amount you could be owed depends on how much you have been overpaying, and for how long. On April 5, at the end of the tax year, HMRC will send a letter to inform people whether they have overpaid or underpaid taxes. These letters are known as P800 letters, and are sent at the end of each tax year.
You can find your tax code on your payslip, a P45 if you have recently left a job or a P60 if it is the end of a tax year – you can also find your tax code online at Gov.uk. If you think your tax code is wrong, you need to contact HMRC directly as your employer won’t be able to do this for you. Sarah Coles, personal finance analyst at Hargreaves Lansdown, told the Sun: “It’s a relatively straightforward process and this money is rightfully yours, so don’t hang about – make a claim as soon as you can.”
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