A quick check could help determine if you’re due a refund (Image: Getty Images)
A staggering number of UK workers could be operating under the wrong tax code, which may entitle them to a refund from . Your tax code is crucial as it instructs your employer or pension provider on how much tax to deduct from your salary before you receive it.
If this code is incorrect, you might have overpaid in taxes and could be due a refund, depending on how long the overpayment has been occurring.
You could be on an incorrect tax code if has inaccurate information about your income or if there are changes in your job. The most common tax code for the current tax year is 1257L for individuals with one job or pension.
This allows you to earn £12,570 in one tax year before being taxed, reflecting the current personal allowance. However, this tax code doesn’t apply to everyone.
For example, if you have a second job, your tax code will likely be BR, D0 or D1, 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.
Your tax code can be found on your latest payslip, on your P45 if you have recently left your job, or on GOV.UK if you have a Government Gateway ID. This 12-digit number is free to sign up for and provides access to UK government services online.
has a useful free tax code calculator, providing a speedier way to check if your tax code has gone awry. If you reckon the taxman’s taken too much of your hard-earned cash, you can claw it back by giving a ring on 0300 200 3300 or with a few taps on their mobile app.
Once they are alerted to the problem, they’ll sort out your tax code with your employer for this financial year, which means you should see any dues balanced in your next salary slip. Any tax overpaid up to four previous years, dating back to the 2020/21 period, is up for grabs.
And if you think they’ve had their hand in your pocket for even longer, it’s still worth ringing – you might get lucky and snag a refund for more than four years if it turns out their mistake led to the overpayment. Expect any cashback to pop through your letterbox in the form of a cheque.
On the flip side, if it looks like you’ve underpaid due to a tax code mishap, brace yourself to foot the bill. But don’t lose heart – tackle it promptly to dodge an even heftier fee down the line.
If the shortfall hasn’t been your doing, there’s a chance you could persuade to write off the debt by asking for an , though this is far from a guarantee.