TAXPAYERS should look out for a key code on their payslips to check if they’re owed thousands of pounds in cash.
It comes as millions of Brits have been urged to look out for tax refund letters landing on their doormats now.
These letters should arrive between June and the end of November, so if you haven’t received one yet keep your eyes peeled over the coming weeks.
If your tax code is wrong, you may be paying more than you need to, and you’ll likely be owed money back.
The code is usually a mixture of letters and numbers – with the most common tax code being 1257L.
But these numbers and letters determine exactly how much income tax you pay on your earnings – so it’s important you’re on the right one.
And if you notice that you’re on the wrong tax code, you can claim back any overpaid tax for the last four tax years.
But it’s your responsibility to check and let HMRC know if it’s wrong.
Here’s exactly what each tax code means.
Plus, we’ve explained how to check and challenge your own tax code.
Tax codes on your payslip will tell you how much you should be paying to HMRC every month.
Here’s our guide to what each of the letters mean:
You can be on the wrong tax code for several reasons, including if you change your job or your salary goes up or down.
Sometimes, HMRC might not have received this information and so will assume your circumstances haven’t changed.
It’s always worth checking your tax code if you have moved jobs or had a change in salary to make sure you’re paying the right amount of tax.
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 ends on April 5, 2024.
The 2024-2025 tax year runs from April 6, 2024, to April 5, 2025.
If, after checking, you think you’re on the wrong tax code, you can contact HMRC to tell them via phone on 0300 200 3300.
This is usually the quickest way to get a response.
Or, you can send a letter to the following address: Pay as You Earn and Self Assessment, HM Revenue and Customs, BX9 1AS, United Kingdom.
If you are on the wrong tax code and have been paying too much, HMRC will change it so you pay the correct amount moving forwards.
They should also reimburse any tax you’ve already overpaid on.
It’s always worth noting, you might contact HMRC about an incorrect tax code and you might have underpaid them.
In this case, you will usually have to pay the money back over 12 months.
But, only if you are earning enough income over the Personal Allowance, which is currently £12,570, and owe less than £3,000 back.
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.
But again, a P800 might tell you if you’ve not paid enough tax and have to pay it back.
A P800 letter will tell you if you can claim online through the government’s website.
If you can claim online, you’ll need your Government Gateway ID and password.
If you claim online, the money will be sent to your bank account within five days.
You can also claim your refund through the HMRC app.
If your P800 letter tells you you will be paid your tax rebate via cheque in the post, 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.
Do you have a money problem that needs sorting? Get in touch by emailing money-sm@news.co.uk.
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