You may not realise that you’re owed a sizeable tax rebate from HMRC.
Brits have been urged to check a number on their payslip as they could be owed thousands of pounds. You may not realise that you could have overpaid on your income tax.
In an update shared via his website Money Saving Expert, Martin Lewis urged people to inspect their tax code. This number can be found on your payslip or on a number of other documents such as a P45, P60, or pension advice slip.
According to Martin, millions of people’s tax codes are found to be incorrect every year. He said: “Is your tax code correct? If not, you could be owed £1,000s.
“If you’re an employee (ie, you work for someone), it’s important to understand that legally your tax code is your responsibility to check, not your employer’s nor HM Revenue & Customs’. Millions of these are wrong each year.”
This could mean that you’ve been overpaying and you’re owed a sum of cash. Or you could even be underpaying, which will result in an unwanted bill down the line.
“If yours is, you may be overpaying tax and due money back, or underpaying and likely to face bill shock in future,” he said. One MSE reader followed Martin’s advice and was able to claim back almost £10,000.
In an email reader Michele said: “I discovered I was paying on every penny I earned, without any allowance. Likely because I’d been self-employed, but I stopped trading three years ago, and my tax code for my salaried employment was not changed.
“It took an hour on the phone, but I have never earned so much in an hour, I have now been refunded £9,400! Thank you so much Martin.”
What is your tax code?
Your tax code will appear as just a series of letters and numbers. Examples include 1257L, S1257L, C1257L, BR, and K497.
For those who are a full or part-time employee, or receive a private pension, the code will be used by your employer(s) or pension providers to calculate the amount of tax that should be deducted from your wages or pension before it’s paid into your bank account. This is part of the pay-as-you-earn (PAYE) system.
However, not everyone is taxed in this way. You won’t have a tax code if you’re fully self-employed, unemployed or you only receive the state pension.
MSE advised: “Each income you have (jobs, private pensions) will have a different tax code. Remember to check them all.”
You can find your tax code on your:
- Payslip
- PAYE coding notice (or P2)
- P45
- P60
- Pension advice slip
You can also check your tax code with HMRC online or by using its app. If you know your code you can use the MSE tax code calculator here to see if you’re owed a rebate.