Tax code warning: Are you paying too much to HMRC? Check your code online now | Personal finance | Finance

A person’s tax code is used by their employer or pension fund to determine how much to deduct from their salary or pension.

There are different codes depending on a person’s income and status, which will appear on a person’s payslip.

It is worth checking if the code is correct as HMRC may change it for a number of reasons.

For example, a worker may be transferred to an emergency tax code if they change jobs.

This means they will pay tax on all their earnings beyond the personal allowance of £12,570.

A taxpayer may also be transferred to the emergency code if they start working for an employer after being self-employed or if they are collecting benefits or the state pension.

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This will be displayed on the payslip as 1257 W1, 1257 M1 or 1257 X.

HMRC should update the tax code when the employer contacts them with the correct details.

If a person did not pay the correct amount of tax that year, they will remain on the emergency code until the correct amount has been paid.

A person’s tax code may also change if they begin to receive income from additional employment or a pension, or if they begin or stop receiving benefits from their employment.


If the tax code is wrong, a worker can also update their employment details online.

Taxpayers can also notify HMRC of any income changes that may have affected their tax code online.

If HMRC updates a person’s tax code and they have paid too much or too little tax, the group will send a P800 or Simple Assessment tax calculation.

This allows the individual to get a refund or pay what they owe.

If there is a tax refund for the previous year, it will usually be sent in the form of a check by mail.

People are also sometimes reimbursed via a tax code tweak, which sees them pay less tax and essentially receive more of their salary.

Consumer group Which? suggested that Britons check their tax code every year or after changing jobs to make sure it is correct.

Who? Money expert Reena Sewraz said: “A lot of people are feeling financial pressure right now as soaring energy and food prices, as well as tax hikes, have put a strain on tax household budgets.

“However, there are steps you can take to save money on taxes.

“It’s always worth doing a quick check to make sure you’re on the correct tax code – if this is incorrect you could be eligible for a tax reduction or refund from HMRC.”

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