MARTIN Lewis’ MSE has issued a warning for millions who have just days left to check their payslips, or risk paying £100s extra.
In the latest MoneySavingExpert.com (MSE) newsletter, readers were warned to check their tax code, as it could be wrong.
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It comes ahead of the end of the financial year on April 6.
If your tax code is wrong, then you could be overpaying tax and therefore due hundreds of pounds back from HMRC.
But savers only have until April 5 to check if their tax code was wrong for the year 2018/19.
That’s because you can only go as far back as four years, and so after April 5, you’ll lose the ability to backdate any overpayments from then.
MSE also warned that it is not HMRC’s or your employer’s responsibility to check if the code is wrong – only yours.
So if it is, you won’t be told unless you check it yourself.
The most common tax code that most working people will be on is 1257L (see below for more info).
However, it’s also worth noting that if your tax code is wrong, it could mean that you’ve been underpaying.
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If this is the case then you will need to pay HMRC back.
While this might be frustrating, it’ll be better to know sooner rather than later so you aren’t paying a huge amount at once.
How do I find out my tax code?
This year’s tax year started on April 6 2022 and runs until April 5 2023.
There are a number of ways you can check what your tax code is for the current financial 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.
MSE also has a free tax code checker – you’ll just need to pop in some info and it’ll tell you what code you should be on.
What does the 1257L tax code mean?
Your tax code will be a combination of letters and numbers.
There will be three or four digits in your tax code – you need to multiply this number by 10 to see what you can earn tax-free a year.
The standard tax code for basic-rate taxpayers (those earning between £12,501 and £50,000) is 1257L.
So you need to multiply 1,257 by 10 to find out what you can earn tax-free – which is £12,750 a year. This is called your personal allowance.
The letters in your tax code indicate how much you have to pay, and the L means that you are entitled to the basic personal allowance.
You might have a different letter in your tax code – we’ve rounded up what the other letters mean below.
How do I know if I’m owed a tax refund?
If you are due a tax rebate HMRC will let you know by sending you a letter called a P800 or a simple assessment letter.
P800 letters can also tell you that you haven’t paid enough tax, so don’t get too excited when one comes through your letterbox.
You will only get a P800 after the tax year has ended – the letter won’t usually arrive until around September.
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.
Do you have a money problem that needs sorting? Get in touch by emailing [email protected]
