Workers urged to check tax code on payslip – could | European Markets

Three quarters (75%) of those that have discovered they have been on the fallacious tax code have been overpaying HMRC by an average of £689 every, a complete of £5.8 billion within the UK as a complete. One in six (15%) UK adults have no idea if they’re on the correct tax code, and of those that checked their tax code 6% discovered they’d been on the fallacious tax code within the final 12 months.

Canada Life, which carried out the analysis, discovered almost one in 5 UK adults (18%) have by no means checked their tax code.

You possibly can verify your tax code, which explains how a lot income tax you pay by checking your payslip, in case you are paid through PAYE or a personal pension.

Canada Life stated essentially the most common motive to verify a tax code was because of a job change or having been on the fallacious tax code earlier than (8%).

Most people could discover they’re on the fallacious tax code as a result of they modified jobs, are working a number of jobs, or have switched to working for an employer following self-employment.

Over two-thirds (69%) of these surveyed by Canada Life stated they weren’t sure how to assert back overpaid tax if they’d been overpaying.

John Chew, tax and property planning specialist, Canada Life, stated “Your tax code is made up of a series of numbers and letters and HMRC uses this to work out how much income tax you pay. 1257L is commonly used where you have one source of income, either through a job or pension, and means you can earn £12,570 a year (your personal allowance) before you start paying income tax.”

Mr Chew said if someone thinks their tax code is wrong, they will need to contact HMRC directly.

He said, “Your employer (if relevant) won’t be able to do this for you. You can check HMRC has your correct, up-to-date information online. If you’re on the wrong code, you might need to update your employment details or whether you’ve had a recent change in income.”

If you have found you have been on the wrong tax code, you may be owed a rebate, or you may owe money to HMRC. HMRC may already be aware of this, so you should be sent a tax calculation letter (a P800 form) or a Simple Assessment letter by the end of the tax year (April 5th), which will tell you how to pay HMRC or reclaim overpaid tax. You will only be sent one of these forms if you are employed or receive a pension.

Chew said: “Remember, there are time limits to reclaim overpaid income tax, which is four years from the end of the tax year in which you are trying to claim so if you are in any doubt, the earlier you contact HMRC, the better.”