Workers may be owed thousands of pounds by checking their payslips for the correct tax code. If you have been on the wrong tax code, you may have been overpaying your tax without even realizing it. By resolving this issue, you could potentially receive a refund worth hundreds or even thousands of pounds. It is crucial to check your tax code to ensure you are paying the correct amount of income tax based on your earnings. You can claim any overpaid tax back for up to the last four tax years if you have been on the wrong tax code.
Tax codes consist of a combination of letters and numbers that determine how much income tax you pay out of each payslip. There are different tax codes that indicate specific factors about your tax liabilities, such as standard tax-free Personal Allowance, Marriage Allowance, and regional tax rates. It is important to understand what your tax code means and how it affects your overall tax payments. It is common for individuals to be on the wrong tax code due to various reasons such as changing jobs, salary changes, or missed updates from employers to HMRC about changes in income.
To check your tax code, you can access your personal tax account online, on your payslips, or through the HMRC app. If you suspect that your tax code is incorrect, you should contact HMRC promptly to rectify the issue. You can reach HMRC by phone or by sending a letter to request a change in your tax code. HMRC will reimburse any overpaid tax back to you on the condition that the error was in their system. It is also possible to receive a tax refund at the end of the tax year based on your annual income assessment. You may need to claim this refund online or through the HMRC app using your Government Gateway ID and password.
If you have been underpaying tax due to an incorrect tax code, HMRC may request that you pay the money back in installments over a period of 12 months. This would apply if you owe less than £3,000 and are earning income above the Personal Allowance. Furthermore, if you are owed a tax rebate at the end of the tax year, you will receive a P800 or simple assessment letter in the post informing you of the amount. You can claim this rebate online through the government website or the HMRC app. The money will typically be deposited into your bank account within five days of the claim or arrive by cheque in the post within 14 days. If you are owed tax for more than one year, you will receive a single cheque for the entire amount at once.
