You could be owed money back from HMRC if you’ve accidentally been placed on the wrong tax code.
A survey by financial services company Canada Life last year revealed that 31% of adults have been on the wrong tax code, and claimed back £689 on average. There are lots of reasons why your tax code may be wrong. For example, if you’ve recently started a new job, or if HMRC has been given incorrect information about your income.
Tax codes are used to show how much tax should be taken from your salary before you receive it. The most common code is 1257L for people who have one job or pension – although not everyone will be on this. If you have a second job, you may 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.
MoneySavingExpert then has a free tax code calculator that you can use to get a rough idea as to whether yours is correct. No tax calculator will be able to tell you for definite if you are on the right code – but this should give you a good indication. To find your tax code, check your latest payslip, or your P45 if you have recently quit your job.
If you’ve overpaid tax and you’re owed money back, you can claim this 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.
For any previous tax years, you should be sent a cheque in the post. If you find out you’ve been underpaying tax, you would owe HMRC money as the tax would need to be paid back. 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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