Millions of UK workers could potentially be on the wrong tax – and if this is you, you may be owed money back from HMRC.
Your tax code tells your employer or pension provider how much tax needs to be taken out of your salary before you receive it. But if you’re on the wrong tax code, it could be that you’ve paid too much tax and could be due a refund. It all depends on how long you’ve been overpaying or.
You could be on the wrong tax code if HMRC has the wrong information about your income, or if your job changes. The most common code for the current tax year is 1257L for people who have one job or pension. This means you can earn £12,570 in one tax year before being taxed, as this is the current personal allowance.
But this tax code doesn’t apply to everyone. For example, if you have a second job, this will likely have a BR, D0 or D1 tax code, or if you have no personal allowance, you may have an 0T tax code. If you are exempt from paying tax, your tax code would be NT, while people in Wales will have a C tax code, and those who pay income tax in Scotland will have an S.
Have you managed to claim money back from an incorrect tax code? Let us know: levi.winchester@reachplc.com
You can find your tax code on your latest payslip, on your P45 if you have recently quit your job, or on GOV.UK if you have a Government Gateway ID. This is a 12-digit number that is free to sign up for, and it allows you to access UK government services online.
MoneySavingExpert.com also has a free tax code calculator that you can use to get a rough idea about whether yours is correct. If it looks like you’ve paid too much tax, then you can claim it back by contacting HMRC by calling 0300 200 3300, or through the HMRC app.
If your tax code is wrong for the current tax year, HMRC will ask your employer to correct it and then you should then get back any owed tax in your wages. You can claim back up to four additional years. This means you can go back as far as the 2020/21 tax year. But even if you think you have been overpaying for longer than this, it doesn’t hurt to still contact HMRC.
They may pay back further than four tax years under certain circumstances – for example, if it was their fault that you overpaid tax. For overpaid tax that doesn’t relate to the current tax year, HMRC will send you a cheque in the post with your refund. If it turns out you’ve not paid enough tax due to an incorrect tax code, then you will have to pay this back.
Don’t let this put you off – it is better to sort this out sooner rather than later to avoid being hit with a bigger bill. You can try and get the tax written off if it was not your fault that you underpaid – but this is not a guarantee. You can do this by asking for an “Extra Statutory Concession” or an A19 from HMRC.
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