Money saving guru Martin Lewis is urging people to check the tax code on their pay slips with some potentially owed thousands. But, on the flip side, as well as some people paying too much, the financial expert has said some people could have been paying too little and has urged people to check their tax code.
According to the Mirror, if your tax code is wrong and you have overpaid, you could entitled to get cash back. However, addressing the code, the Money Saving Expert newsletter says it could also mean you may have to pay some money back back if you have underpaid.
The code which appears on employee's payslip is used by employers or companies providing a pension to determine how much money is taken off employees' pay or pensions. But, even if this code is wrong, it is the employee's responsibility to report that they are being taxed incorrectly, even if it means them losing out financially.
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The code is made up of several numbers and a letter. The code 1257L which allows £12,570 as income you are not taxed on is the one used by most people who are employed or have a pension. Different numbers and digits mean different things in regards to how much tax is taken each month by Inland Revenue..
A tax code can be found in a variety of ways including:
- on a "Tax Code Notice" letter from HMRC
- on your payslip
- on HMRC's app
- by checking your tax code online on your personal account
Your tax code should be updated automatically if your income changes and the information is provided by your employer. However, there is the possibility that HMRC could have incorrect information which will result in the wrong tax code being issued to you.
You can use the tools to check your code on the government's website. Here you can update your employment details and tell HMRC about any income changes which could impact your tax code. HMRC will send you either a tax calculation letter, P800, or a Simple Assessment letter if you believe you have overpaid tax.
Asking for refunds and processing these can be done online but you will need a Government Gateway user account. If you don't have one, a National Insurance (NI) number or two of the following will be enough to make one:
- a valid UK passport
- a driving licence issued by the DVLA (or DVA in Northern Ireland)
- a payslip from the last three months or a P60 from your employer for the last tax year
- details of your tax credit claim
- details from your Self Assessment tax return (in the last two years)
- information held on your credit record if you have one (such as loans, credit cards or mortgages)
You will receive a Simple Assessment letter if income taxis owed tax which cannot be automatically taken out of your income. And if you owe HMRC £3,000 or more tax must be paid on your state pension.
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