IF you’ve been overpaying on taxes, you could be thousands of pounds out of pocket.
You could be forking out more than you should be for tax for a number of reasons.
For example, you might have moved jobs and not given your new workplace your P45 or filled out a starter checklist form.
Here’s how you can check if you’ve been paying too much, how to make a claim and how to check when you’ll be get a refund.
How do I check if I’m paying too much tax?
If you’re paying too much tax, you’re probably on the wrong tax code.
Your tax code is a combination of letters and numbers which is displayed on your payslip, usually near your National Insurance number.
If your tax code is wrong, then you might be paying too much – or too little – tax.
The standard tax code for basic-rate tax payers (those earning between £12,501 and £50,000) is 1257L.
You need to multiply the numbers in your tax code to see what you can earn tax-free a year – so for those on the tax code 1257L, you can earn £12,570 without being taxed.
The letters in your tax code indicate how much you have to pay, and the L means that you are entitled to the basic personal allowance.
We explain what all the letters in your tax code mean below.
What do the letters mean in my tax code?
THE letters in your the code on your payslip indicates how much tax you have to pay. Here’s our guide to what each of the letters mean:
- L You’re entitled to the standard tax-free Personal Allowance
- M Marriage Allowance: you’ve received a transfer of 10 per cent of your partner’s Personal Allowance
- 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 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.
You can check if your tax code is correct by using HMRC’s online tool or MoneySavingExpert’s free online tax calculator.
If it's wrong, contact HMRC on 0300 200 3300.
If it's right, you don't need to do anything.
How do I claim for a tax refund?
If you think you’ve been paying too much tax, you need to to contact HMRC (using the same number above) and ask them for a P800 letter.
HMRC gives out these letters to Brits that have paid too much – or too little – tax.
These letters are usually given out automatically by HMRC after the tax year has ended in April.
You’ll get it through your letterbox around November.
Your P800 letter will tell you if you can claim your refund online through the gov.uk’s website.
If you’ve been told you can make a claim and you've submitted one, HMRC says you’ll get your refund within five working days.
If you don’t claim for a tax refund within 42 days of getting a P800 letter, HMRC will send you a cheque.
How do I check when my tax refund will be paid?
If you’ve put a claim in for a tax refund, then you can check when you’ll be paid in a number of ways.
You can ring HMRC (on the same number as above) and make sure you have your national insurance number handy before you call.
Or, you can use HMRC’s Where’s My Reply tool to find out how long it will take to get your refund.
You’ll have to fill out some details about when you contacted HMRC and how you applied for your refund, so make sure you have this information handy.
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