The one HMRC tax code that could mean you are owed £1,000s
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Overlooking a crucial tax code could help you determine if HM Revenue and Customers (HMRC) owes you money. This five-digit code, visible on all your payslips, helps identify your tax band. It's not rare for workers to find they've been assigned the wrong tax band, potentially overpaying taxes. In such cases, you could be due a substantial refund, with possibly £1,000s available depending on your situation and how long you've overpaid tax.
However, it's worth noting that you may also have underpaid tax due to an incorrect code, in which case you'd need to repay any outstanding tax to HMRC. The most common tax code for UK employees is 1257L, indicating you're entitled to the standard £12,570 tax-free allowance.
Letters found in your tax code help to indicate what situation you're in. According to government guidance, the following codes help determine your tax status:. Checking your tax code can be straightforward and simple. All you need to do is:. Alternatively, you can check your tax code on GOV. UK or via the HMRC app. If you don't already have a Government Gateway ID, you can create one online here.
In certain instances, HMRC may reach out to inform you that a tax rebate is due to you, which will be communicated via a P800 letter. However, it's crucial to understand that this letter could also indicate that you've underpaid your tax and will detail the amount you owe.
