To pay the right amount of tax from PAYE income hinges on having the correct tax code.
The tax code used by your employer (or other income source like a pension) can originate from HMRC or the employer who might use a standard code based on regulations defined by HMRC.
A number of reasons can result in you ending up with an incorrect code which can often mean you will overpay or be left with a tax bill.
Either way verifying that your employer is using the appropriate tax code for you is crucial and HMRC will need to be contacted if your tax code is wrong.
When contacting HMRC you should provide all the necessary, accurate information so they can work out your correct tax code.
It’s recommended to gather together as many of these details below as you can before you contact HMRC:
- Full name (including middle names).
- Date of birth.
- Email address.
- National insurance number.
- Employer/pension provider tax reference number.
- Employee works number or pension number (private and/or company).
- Estimate of total income for current tax year.
- Company benefits (e.g. health care, car fuel allowance).
- Any other income (e.g. savings interest, property rental).
- Weekly state benefits or state pension payments.
How do I check my tax code?
HMRC let you check your tax code for the current tax year online. You can gain access to the workings of your tax code through your personal tax account or the HMRC app.
If you think previous tax years need checking you can do this online as well by logging in through your government gateway account.
Your tax free personal allowance is an important part of how your tax code is calculated and should be assessed at the same time as checking your tax code.
Why is my tax code wrong?
Your tax code is something that can be wrong for numerous different reasons including changing your job, company benefits and an increase or decrease in your taxable earnings.
Sometimes HMRC will not be able to issue you with an accurate tax code because they don’t have all of the information they need to make the necessary changes.
This is where you come in and need to check your tax code regularly especially if you have a change in circ*mstances.
The tax office places the responsibility on you to let them know about certain amendments and if you don’t you will continue to over or underpay income tax.
Why does my tax code matter?
If there is an error with your tax codethen you are paying the wrong amount of income tax.
If you have paid too much then you can reclaim the overpayment, as long as you are within HMRC’s deadlines.
If you have paid too little then you need to repay HMRC. Either way it is better to find out sooner than later so your current tax code can be increased or decreased to match your circ*mstances.
How do I contact HMRC about my tax code?
As soon as you realise there has been a mistake with your PAYE tax code or you have had a change in circ*mstances you must get in touch with HMRC by email or phone (0300 200 3300).
HMRC can make adjustments and send your employer a new tax code to use moving forward. If you have overpaid income tax because of an incorrect code you should receive this back automatically after your new tax code has been operated.
