TAX codes indicate how much you should be paying HMRC each month.
It is important to make sure you are on the right tax code and you can do this in a few simple steps.
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If you have been accidentally overpaying tax, you could be owed money back from the tax office.
HMRC issues all the new tax codes in March and April so this is the time that you could expect to get a letter confirming any changes.
As well as being owed tax for being on the wrong tax code, you could have also been underpaying which means you will owe HMRC.
This is why it is important to know how to check your tax code and make sure you are paying the right amount from the outset.
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Moving jobs and a delay in giving your P45 to your new workplace can result in you being put on the wrong tax code.
If this happens you will be put on what is called an “emergency tax code” until you contact them.
We explain how to check your code and claim back any money that you might be owed.
What is a tax code?
A tax code is used to determine how much you should be paying HMRC each month in tax.
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It is a combination of numbers and letters used by employers and pension providers to work out how much income tax you should pay.
You don’t have to do anything as the money will be taken from your pay packet before it lands in your account.
What are the different types of pensions?
If you look on your payslip you can see your pay amount before and after tax has been deducted.
Depending on how much you earn will determine how much tax you pay, each rate of tax is called a “band”.
You can earn up to £12,570 in a tax year before paying tax, this is called your personal allowance.
A tax year runs from April 6 one year and ends on April 5 the following year.
For example, the 2023 tax year starts on April 6, 2023 and ends on April 5, 2024.
The standard tax code for basic-rate taxpayers who have one job or pension is 1257L.
You can work out your personal allowance by multiplying this by 10.
This means that you can earn £12,570 without paying tax on it.
How can I check my tax code?
You should expect to get a letter from HMRC confirming your tax code for the following year around March and April.
Therefore you should expect to receive a letter soon, if you haven’t already, confirming your tax code for the 2024/2025 tax year.
If you haven’t had a letter, or think you may have misplaced it, there are several ways you can check your tax code for the current tax year.
Your tax code will be displayed on your payslip, usually listed near your National Insurance number.
Your company has to provide you with a payslip, so if you’re not sure how to access it, ask your employer for guidance.
You can also use the government’s online tax checker tool to view your tax code.
How do I know if my tax code is wrong?
You can check if your tax code is correct by using HMRC’s online tool or MoneySavingExpert’s free online tax calculator.
If it is wrong you will need to contact HMRC to let them know and you can do so on 0300 200 3300.
If it is right, then you don’t need to do anything as you will be paying the right amount of tax.
HMRC will write to you or email you if they change your tax code – and they will also write to your employer about any changes too.
Then, your updated tax code should show on your next pay slip.
How do I know if I’m owed a tax refund?
HMRC will let you know if you are due a tax rebate by sending you a letter called a P800 or a simple assessment letter.
P800 letters are not always good news and can also tell you that you haven’t paid enough tax and you owe HMRC money.
You will only get a P800 after the tax year has ended – and the letter will arrive between April and November.
This letter will tell you if you can claim online through the government’s website.
If you claim online the money will be sent to your account in about five days.
Or you can wait for 45 days and the government will send you a cheque in the post.
How much could I get back?
The amount you could get back varies and depends on what tax code you were put on, your salary, and how much tax you should have been charged.
In some cases you could be owed hundreds, and sometimes even thousands of pounds.
When you don’t deal with this kind of thing everyday it can be confusing, but don’t worry there are organisations out there that can help you.
If you think you might be owed tax back, and are struggling to work out how much, you can contact Citizens Advice or TaxAid who will be able to help you.
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Meanwhile, we can reveal the exact codes on your pay slip to look out for which could mean you are owed cash worth £689.
Also, millions of workers will receive a pay boost of up to £900 within days – are you one of them?
When does the tax year start and end?
Tax years run differently to the standard January to December year
Instead it runs mid-year from April to April.
Many other countries around the world have tax years that run with the calendar year.
In Ireland, the US, France and Germany for example, it starts on January 1 and ends on December 31.
But in the UK for historical reasons, our tax year starts and finishes mid-way through.
The 2023-2024 tax year starts on April 6, 2023 and end on April 5, 2024.
The 2024-2025 tax year runs from April 6, 2024 to April 5, 2025.
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