New research has found that almost one third of UK adults who have checked their tax code were on the wrong one - and it could mean you are owed money back from HMRC
Workers are being encouraged to scrutinise their payslips after HMRC received an estimated £5.8 billion in overpaid tax. The excess payments have resulted from employees being on incorrect tax codes.
The findings also show that nearly one in five UK adults have never checked their tax code. Those who have checked their tax code have only done so on average once every 16 months. Among all UK adults, less than half know that it is currently correct. Moreover, almost four in ten don’t know what any of their tax code means, leaving them at a disadvantage in the first place.
John Chew, tax and estate planning specialist, Canada Life, said: "“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 before you start paying income tax.
“Understanding your tax code is vital to ensure you’re paying the right amount of income tax. Those who are not on the right code may find themselves out of pocket. If it’s wrong, you may end up contributing more or less than you’re supposed to. So, if you haven’t checked your tax code recently, now is a good time.
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Tax codes on payslips reveal if you're owed cash worth £689The exact tax codes on payslips that signal if you’re owed cash worth £689 has been revealed. At the end of each tax year on April 5, HMRC sends out letters to inform people if they have paid too much or too little tax. These are known as P800 letters and they usually arrive around this time. Tax expert Jessica Middleton, from family business Middleton Professional Accounts Services, said: "If the number's wrong, your state benefits, such as the pension or maternity pay, could be affected. It's worth the effort to double-check." "And don't think this can't happen we have had clients using the wrong national insurance number for years and because various tax departments don't talk to each other, they were none the wiser." The most common code is 1257L for people who have one job or pension - although not everyone will be on this, reports Birmingham Live. To find your tax code, check your latest payslip, or your P45 if you have recently quit your job
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