YOU could be missing out on hundreds of pounds from the taxman – but there’s a quick way to check if you’re owed.
Millions of people are thought to be on the wrong tax code, meaning they’re not getting the right amount of money.
If you’re employed or paid via PAYE, or if you receive a private pension, you will be given a tax code by your employer via HMRC.
The tax code will appear on your payslip and it dictates how much income tax you pay on your earnings.
Therefore it’s crucial to check if you’re on the right one.
Research by Canada Life last year found that workers are paying £5.8billion more to HMRC than they should because they’re on the wrong tax code.
In fact, an estimated 31% of adults have been on the wrong tax code at some point – with the average overpayment worth £689.
You might be on the wrong tax code for several reasons, for example if you have started a new job and HMRC has not received your income details in time.
You might also be on the wrong code if you’ve started working for an employer after being self-employed, or you’re working more than one job at a time.
People who are on the wrong code might get put onto an emergency tax code until they contact HMRC about changing it.
It’s worth bearing in mind that although the taxman might owe you money, it’s also possible you could be underpaying and therefore would owe money back to HMRC.
Either way, it’s best to make sure you’re paying the right amount of tax as you don’t want to be potentially landed with a lump sum to pay back.
How do I check my tax code?
You can check your tax code on your online personal tax account, via payslips, or on the HMRC app.
You may have also received a “Tax Code Notice” letter from HMRC which you can check.
If you’re logging on to your personal tax account online, you’ll need your Government Gateway ID and password.
If you don’t have this you can use your National Insurance number or postcode and two of the following:
- a valid UK passport
- a UK photocard 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 a tax credit claim if you have made one
- details from a Self Assessment tax return (in the last two years) if you made one
- information held on your credit record if you have one (such as loans, credit cards or mortgages).
How to report a wrong tax code
If you believe you’re on the wrong tax code, you’ll need to contact HMRC.
The quickest way to get in touch is to phone them on 0300 200 3300.
Another option is to send a letter to the following address: Pay as You Earn and Self Assessment, HM Revenue and Customs, BX9 1AS, United Kingdom.
If it turns out you’re on the wrong tax code and have been paying too much, HMRC will reimburse you.
They will also change your tax code so you pay the right amount going forward.
If you’ve been underpaying tax, you will usually have to pay the money back over 12 months.
But that’s only if you are earning enough over the personal tax allowance (£12,570) to cover the underpayment and owe less than £3,000.
HMRC might get in touch with you to tell you you’re owed a tax rebate too – they’ll do this via a P800 letter or a simple assessment letter in the post.
However, you could also get a P800 telling you that you’ve not paid enough tax and have to pay it back.
If you’re owed money, the letter will tell you if you can claim online through the Government website.
Once you’ve put in your claim, it should be sent to your bank account within five days.
Another option is to claim your refund through the HMRC app.
Your P800 letter might also tell you that will be paid your tax rebate via cheque in the post.
In this case, you should receive it within 14 days of the date on your letter.
If you’re owed tax from more than one year, you’ll get a single cheque for the entire amount.
It’s also worth knowing that there are time limits in place to reclaim any overpaid tax.
This is currently four years from the end of the tax year in which you are trying to claim – so if in doubt, contact HMRC as soon as possible.
How do I file a tax return?
TO file a self assessment tax retun, you’ll need to register with HMRC first, which will then issue you with a Unique Taxpayer Reference (UTR).
You must register for self assessment by October 5 if you have to file a tax return and you have not sent one before.
You can do so by visiting www.gov.uk/register-for-self-assessment.
If you’ve previously registered and already have a UTR, you don’t need to go through this step again.
Once you’ve got your UTR, you can sign in via the “Self Assessment tax return” section of HMRC’s website by visiting www.gov.uk/log-in-file-self-assessment-tax-return.
You can then file your self assessment tax return online.
The deadline for sending a return online is January 31 every year.
If you need a paper copy of the main Self Assessment tax return, call HMRC on 03000 200 3610 and request an SA100 form.
The deadline for sending a return using a paper form is October 31 every year.
You need to pay the tax you owe by midnight on January 31 each year.
HMRC accepts your payment on the date you make it, not the date it reaches its account.
File late and HMRC will issue you with a fine.
