Millions missing out on £694 – simple tax code check that could reveal if you’re owed cash

MILLIONS of people could be missing out on £694 but a simple tax code check could get you the money back.

Workers are overpaying £8.2billion to HMRC because they are on the wrong tax code.

Workers are missing out on hundreds of pounds because their tax code is wrongGetty

Nearly half (43%) of adults have found they are on the wrong tax code, according to research by Canada Life.

Nearly three quarters (71%) of those who were on the wrong code were overpaying.

If you’re not on the right tax code, you could end up out of pocket by hundreds of pounds.

You’ll have a code if you’re employed full-time or part-time, or receiving a private pension.

It determines how much income tax your pay on your earnings – so it’s important you’re on the right one.

But millions of workers don’t check if it is correct.

Of those who have paid too much tax, the research found that 13% were paying more than £1,000.

This sometimes happens after you’ve moved jobs and not given your new workplace your P45 or filled in a starter checklist form.

Often the tax office will automatically place you on the emergency tax code until you contact them to tell them otherwise.

But you could also be underpaying and if so, you will need to pay it back.

It’s always better to check sooner, rather than later to avoid a big bill all at once.

Only a third (36%) said they’re comfortable with claiming back tax – this means 34million people are unsure about the process and could be missing out.

Andrew Tully, technical director at Canada Life said: “Understanding your tax code is vital to ensure you’re paying the right amount of income tax.

“If it’s wrong, you may end up contributing more or less than you’re supposed to.

“And although overpaying means you should get a rebate – if and when it’s spotted – underpaying means you may have to pay HMRC a lump sum to make up the short-fall.”

How do I check my tax code?

You can check your tax code on your personal tax account online, on any payslips or on the HMRC app.

If you’ve got one, you can check it on a “Tax Code Notice” letter from HMRC too.

Bear in mind, you might need your Government Gateway ID and password to hand to log in.

But if you don’t have this you can use your National Insurance number or postcode and two of the following:

a valid UK passporta UK photocard driving licence issued by the DVLA (or DVA in Northern Ireland)a payslip from the last three months or a P60 from your employer for the last tax yeardetails of a tax credit claim if you have made onedetails from a Self Assessment tax return (in the last two years) if you made oneinformation held on your credit record if you have one (such as loans, credit cards or mortgages)

What do I do if it’s wrong?

If, after checking, you think you’re on the wrong tax code, you can contact HMRC to tell them via phone on 0300 200 3300.

This is usually the quickest way to get a response.

Or, you can send a letter to the following address: Pay as You Earn and Self Assessment, HM Revenue and Customs, BX9 1AS, United Kingdom.

If you are on the wrong tax code and have been paying too much, HMRC will change it so you pay the correct amount moving forwards.

They should also reimburse any tax you’ve already overpaid on.

It’s always worth noting that you may also contact HMRC about an incorrect tax code and realise you’ve underpaid them.

In this case, you will usually have to pay the money back over 12 months.

But, only if you are earning enough income over the Personal Allowance, which is currently £12,570, and owe less than £3,000 back.

HMRC might get in touch with you to tell you you’re owed a tax rebate too – they’ll do this via a P800 letter or a simple assessment letter in the post.

But again, a P800 might tell you if you’ve not paid enough tax and have to pay it back.

A P800 letter will tell you if you can claim online through the government’s website.

If you can claim online, you’ll need your Government Gateway ID and password.

If you claim online the money will be sent to your bank account within five days.

You can also claim your refund through the HMRC app.

If your P800 letter tells you you will be paid your tax rebate via cheque in the post, you should receive it within 14 days of the date on your letter.

If you’re owed tax from more than one year, you’ll get a single cheque for the entire amount.

What are the different tax codes?

Tax codes on your payslip will tell you how much you should be paying to HMRC every month.

Here’s our guide to what each of the letters mean:

L – You’re entitled to the standard tax-free Personal AllowanceM – Marriage Allowance: you’ve received a transfer of 10% of your partner’s Personal Allowance (£1,260)N – Marriage Allowance: you’ve transferred 10 per cent of your Personal Allowance to your partnerS – Your income or pension is taxed using the rates in ScotlandT – Your tax code includes other calculations to work out your Personal Allowance, for example it’s been reduced because your estimated annual income is more than £100,0000T – Your Personal Allowance (which is currently £12,570) has been used up, or you’ve started a new job and your employer doesn’t have the details they need to give you a tax codeBR – All your income from this job or pension is taxed at the basic rate (usually used if you’ve got more than one job or pension)D0 – All your income from this job or pension is taxed at the higher rate (usually used if you’ve got more than one job or pension)D1 – All your income from this job or pension is taxed at the additional rate (usually used if you’ve got more than one job or pension)NT – You’re not paying any tax on this incomeTax codes starting with K mean you have income that isn’t being taxed another way and it’s worth more than your tax-free allowance

You can be on the wrong tax code for a number of reasons, including if you change your job or your salary goes up or down.

Sometimes, HMRC might not have received this information and so will assume your circumstances haven’t changed.

It’s always worth checking your tax code if you have moved jobs or had a change in salary to make sure you’re paying the right amount of tax.

Do you have a money problem that needs sorting? Get in touch by emailing [email protected]

  Read More 

Advertisements