CHECK IT
Full list of codes on payslips that reveal if you’re owed cash – and you could get £1,000s back
Watch our video to learn what your tax code letter means
WORKERS could claim thousands of pounds by keeping an eye out for a certain code on their payslips.
If you're on the wrong tax code, you may have been overpaying your tax each payday without even realising it.
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This means you could be owed a whopping sum of money back - so it's important to check.
Your tax code is typically a mixture of letters and numbers, most commonly 1257L.
These letters and numbers determine how much income tax you pay out of each payslip.
So if there's a chance your code is wrong, it's important you find out.
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If you raise the issue with HMRC, you can claim any overpaid tax back for up to the last four tax years.
For example, previously, a Martin Lewis fan revealed they had managed to secure a refund worth £2,585 after realising the mistake.
The amount you can get will vary based on how much you earn, and how much you've been overpaying.
It is your responsibility to find out if you are on the correct tax code, and it is a common error.
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It can happen for several reasons, such as when you change your job or your salary changes.
To make things easier, we have outlined the different codes, what they mean, and how to check and challenge your own.
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What are the different tax codes?
Your tax code indicates how much you should be paying out to HMRC each month.
Below we have explained what the different codes mean:
- 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 per cent 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.
If HMRC does not receive information about your workplace or salary changes, then sometimes it will fail to change your tax code.
This means the perfect time to check is when you've moved jobs or had a pay rise or cut.
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.
If you've got one, you can check it on a "Tax Code Notice" letter from HMRC too.
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 should I do if my tax code is wrong?
If you reckon you've been landed with the wrong tax code, you should contact HMRC sooner rather than later.
The quickest way to do this is typically via the phone on 0300 200 3300.
If not, you could also send a letter to: Pay as You Earn and Self Assessment, HM Revenue and Customs, BX9 1AS, United Kingdom.
HMRC will change your code upon request and reimburse you for the money which has been overpaid over the last four tax years.
According to the website, this process can take anywhere between 5 days and 8 weeks.
You could also notice an incorrect tax code and realise you've been underpaying.
In this case, HMRC may request that you pay the money back in installments over 12 months.
It will only ask you to do this if you're earning income above the Personal Allowance - currently £12,570 - and owe less than £3,000 back.
HMRC might also reach out if you're owed a tax rebate at the end of the tax year (in April).
This is where your tax is assessed annually to see if you're owed or owe, money based on how much you've paid that year.
You should receive a P800 letter or a simple assessment letter in the post, which will advise you if you should claim online via the government website.
You will need your Government Gateway ID and password to do this.
You can also claim through the HMRC app.
The money should then arrive in your bank account five days after claiming it back.
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If your P800 letter tells you you will be paid via a cheque in the post, this should arrive within 14 days.
And if you're owed tax for more than one year, you'll get a single cheque for the entire amount to be paid to you at once.
Do you have a money problem that needs sorting? Get in touch by emailing [email protected].
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