WORKERS can scour their payslips to discover if they are due a tax refund that could be worth thousands of pounds.
If your tax code is wrong, you may be paying more than you need to, and you’ll likely be owed money back.
HMRC opening a tax letter.[/caption]
Your tax code is usually a mixture of letters and numbers – with the most common tax code being 1257L.
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.
However, 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.
Tax codes explained
The letters at the start of your tax code all mean something different and will show to you whether you are entitled to the personal allowance.
The amount you can each year before being taxed is £12,750.
The standard tax code for most people with only one job is 1257L.
For the tax year 2025-2026, the income tax rate bands in the United Kingdom are divided into three categories.
The basic rate of tax applies to taxable income up to £37,700, which is taxed at 20%.
The higher rate of tax applies to taxable income between £37,701 and £125,140, which is taxed at 40%.
The additional rate of tax applies to taxable income over £125,140, which is taxed at 45%.
These bands define how much tax individuals are required to pay based on their taxable income:
- L – You’re entitled to the standard tax-free Personal Allowance
- M – Marriage Allowance: you’ve received a transfer of 10% of your partner’s personal allowance (£1,260)
- N – Marriage Allowance: you’ve transferred 10% of your personal allowance to your partner
- S – Your income or pension is taxed using the rates in Scotland
- T – Your tax code includes other calculations to work out your personal allowance, for example, it’s been reduced because your estimated annual income is more than £100,000
- 0T – Your personal allowance (which is currently £12,570) has been used up, or you’ve started a new job and your employer doesn’t have the details they need to give you a tax code
- BR – All your income from this job or pension is taxed at the basic rate (usually used if you’ve got more than one job or pension)
- D0 – All your income from this job or pension is taxed at the higher rate (usually used if you’ve got more than one job or pension)
- D1 – All your income from this job or pension is taxed at the additional rate (usually used if you’ve got more than one job or pension)
- NT – You’re not paying any tax on this income
- Tax codes starting with K mean you have income that isn’t being taxed another way and it’s worth more than your tax-free allowance.
There are many reasons that you could be on the wrong tax code.
Often errors can occur if your salary changes.
HMRC don’t often given updates relating to new circumstances.
If you move jobs you should check your tax code or if you change salary to ensure your paying the right amount.
How do I check my tax code?
YOU can check your tax code on your personal tax account online, on any payslips or on the HMRC app.
To log in, visit www.gov.uk/personal-tax-account.
If you have one, you can also check it on a “Tax Code Notice” letter from HMRC.
Bear in mind that you might need your Government Gateway ID and password to hand to log in.
But 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)
What if my tax code is wrong ?
If you think that your tax code might be wrong. Contact HMRC.
You can call them on 0300 200 3300
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 ensure that you pay the correct amount going forwards.
You should also be reimbursed for any tax that you have overpaid.
Likewise, if you have find that you have underpaid tax then should contact HMRC and you will usually have 12 months to pay the money back.
HMRC might get in contact with you to say that you’re owed a tax rebate too.
In this situation they would send you a P800 or a simple assemment letter in the post.
A P800 might tell you if you’ve not paid enough tax and have to pay it back. It will show if you can claim online or through the government’s website.
If it says you will be paid via cheque then you should recieve it within 14 days of the date on your letter.
If you need to claim online, you’ll have to provide your Government Gateway ID and password.
The money will then be sent back to within five days.
You can also claim your refund through the HMRC app.
How much are people typically owed ?
The tax year runs from 6 April to 5 April, so HMRC will work out whether you paid the right amount shortly after this period.
Earlier this year, HMRC issued a call out on social media encouraging working Brits to check if they are missing a backdated payment.
HMRC said that nearly one million people haven’t claimed money that they are owed.
They had also sent out nearly four million P800 letters who are owed an income tax refund.
Further anaylsis also showed that £48.7million was overpaid in tax on people’s pension.
