CHECKING your tax code takes only seconds, and failing to check can be expensive – as Martina Brannigan discovered.
If your code is wrong, you could end up paying hundreds of dollars more than you need to, and you may end up owed your money back.
Your tax code determines how much income tax you pay on your income – so it’s important that you choose the right one.
In February, 25-year-old Martina Brannigan from Newcastle discovered she had been given the wrong tax number after starting a new job.
Martina left her old job after five years in December and started a new job in finance the same month.
She still owes cash from her former employers from 97 hours of holiday pay, which is due in January.
But after a payroll error, the payment was not made and she received cash instead in February.
When Martina received her monthly pay slip for her new job, she noticed that her salary had fallen by £400 compared to the previous month.
In a panic, Martina looked at her tax code and noticed the letters “BR” – usually given to people with more than one job.
This code means you don’t get a Personal Allowance, so everything you earn is taxed at 20% (BR stands for basic rate).
Martina got this code because of the holiday pay from her old job, and her new salary, making it look like she was working two jobs at once.
She contacted HMRC through her Government Portal account and in early April she received a letter with a new tax code and £400 refund.
Martina told The Sun: “It’s been a nightmare. I’ve been missing bills for two months.
“My monthly bill is usually around £700 including my mortgage and energy bill – but I can’t afford it so I have to withdraw £2,000 of my savings.
“I spent with a credit card to pay for regular expenses like gas and grocery shopping.
“It was a relief when I received the letter saying it was sorted and I had managed to get my finances back.
“I’ve never checked my tax code before but from now on, I’ll make sure to check monthly.”
The Sun has reached out to HMRC for comment.
It is your responsibility to check and let HMRC know if it is wrong, otherwise you may end up paying too much like Martina.
But always remember, you can pay too little and have to pay it back.
What are the different tax codes?
The tax code on your payslip will tell you how much you have to pay to HMRC each month.
Here’s our guide to what each letter means:
- OFFER – You are entitled to a standard tax-free Personal Allowance
- m – Marriage Allowance: you have received a transfer of 10% of your Partner’s Personal Allowance (£1,260)
- WOMEN – Marriage Allowance: you transferred 10 percent of your Personal Allowance to your partner
- S – Your income or pension is taxed pro rata in Scotland
- t – Your tax code includes other calculations to work out your Personal Allowance, e.g. it has been reduced because your estimated annual income is more than £100,000
- 0BILLION – Your personal allowance (currently £12,570) 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 number
- BR – All your income from this job or pension is taxed at the base rate (usually used if you have more than one job or pension)
- D0 – All your income from this job or pension is taxed at a higher rate (usually used if you have 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 have more than one job or pension)
- NT – You do not have to pay any tax on this income
- Tax code starting with KY which means you have income that is not taxed otherwise and it is worth more than your tax-free allowance
You can enter the wrong tax number for a number of reasons, including if you change jobs or your pay rises or falls.
Sometimes, HMRC may not receive this information and will therefore assume that your circumstances have not changed.
You should always check your tax code if you’ve moved jobs or changed your salary to make sure you’re paying the correct amount of tax.
How do I check my tax identification number?
You can check your tax ID on your personal tax account online, on any payslip or on the HMRC app.
If you already have one, you can also check it on the “Tax Identification Number Notice” mail from HMRC.
Please note that you may need a Government Portal ID and password to log in.
But if you don’t have this, you can use your National Insurance number or postal code and two of the following:
- valid UK passport
- UK photo driving license issued by the DVLA (or DVA in Northern Ireland)
- pay slips from the last three months or P60 from your employer for the previous tax year
- details on claiming tax credits if you have already done
- details from your Self-Assessment tax return (for the last two years) if you filed
- information kept on your credit file if you have one (such as loans, credit cards or mortgages)
What should I do if it’s wrong?
If, after checking, you think you entered the wrong tax code, you can contact HMRC to notify them on 0300 200 3300.
This is usually the fastest way to get a response.
Or, you may mail to the following address: Pay As You Earn and Self Assessment, Revenue and Customs HM, BX9 1AS, UK.
If you entered the wrong tax code and overpaid, HMRC will change it so you can pay the correct amount later.
They should also refund any taxes you overpaid.
It should be noted that you can also contact HMRC about an incorrect tax number and realize that you have underpaid them.
In this case, you will normally have to pay the money back within 12 months.
However, only if you earn enough income on Personal Allowance, now £12,570 and owe less than £3,000 again.
HMRC may contact you to let you know that you are also entitled to a tax break – they will do so through a P800 letter or a simple review letter in the mail.
But again, the P800 can let you know if you haven’t paid enough tax and have to pay it back.
A letter P800 will tell you if you can claim online through the government website.
If you can claim online, you will need your Government Gateway ID and password.
If you request online, the money will be sent to your bank account within five days.
You can also request a refund through the HMRC app.
If your P800 letter tells you you will be paid your tax refund by mailed check, you should receive it within 14 days of the date on the letter.
If you owe taxes for more than a year, you will receive a single check for the full amount.
Do you have a money problem that needs sorting? Get in touch by emailing firstname.lastname@example.org