Could HMRC owe you hundreds of pounds?

Your tax code tells your employer how much tax to take from your wages.

But what if your tax code is incorrect?

According to research by Canada Life, more than one in three (31%) adults have been on the wrong tax code at some point and claimed back an average of £689.

So it could be well worth checking that your tax code is right, so you can claim back the money you’ve overpaid and make sure you don’t pay more than you need to in the future.

And if you’re self-employed or have more than one job, it’s especially important to check your codes are right for each source of income.

Where to start: Your P60

If you were employed on or before 5 April, your employer should have given you a P60 by now - either through the post or online.

This form shows how much tax you paid in the last financial year. 

You’ll find your tax code near the top. 

If it includes "BR", "D0", or "D1", you might have been taxed at a flat rate with no personal tax-free allowance - and possibly paid more than you had to.

That’s because these codes are often used for second jobs or when HMRC doesn’t have full information.

Other ways to check your tax code

If you’re not sure what your current tax code is, you can also:

• log into your personal tax account online
• use the HMRC app
• look at your latest payslip
• check any recent letters from HMRC (you may have a tax code notice)

What should I do if something doesn’t look right?

If you think your tax code might not be correct, get in touch with HMRC as soon as possible, either by:

• calling 0300 200 3300
• or writing to: Pay As You Earn and Self Assessment, HMRC, BX9 1AS

Why your P60 matters

It can be tempting to ignore letters from HMRC when they land on your doormat.

But your P60 isn’t just for checking you’re paying the right amount of tax.

It’s also needed if you want to:

• apply for tax credits or benefits
• get a mortgage or loan
• claim a tax rebate

So it’s worth keeping it safe and checking it carefully.

What happens if I’m owed money?

If you’ve paid too much, you could get a refund straight into your bank account within five days or receive a cheque within two weeks.

Some people may also receive a P800 letter or a simple assessment from HMRC explaining how much they’re owed and how to claim it.

If you don’t receive a letter but believe you’ve overpaid, you can still claim online through your HMRC account or by contacting HMRC directly.

But don’t wait too long.

You can only claim for the last four years.

What if it turns out I owe HMRC money?

Of course, querying your tax code could lead to you discovering that you’ve actually underpaid and owe HMRC some money.

If that’s the case, you can usually pay it back gradually over 12 months, rather than as a lump sum.

Checking your tax code only takes a couple of minutes.

But it could put hundreds of pounds in your pocket, so don’t delay.