As well as employees who are paid by PAYE, this could also impact pensioners who have paid too much tax
HMRC is sending around four million tax refund letters between June and August. You might be due a P800 letter in the post if you’ve overpaid Income Tax.
As well as employees who are paid by PAYE, this could also impact pensioners who have paid too much tax. There are lots of reasons why people end up paying too much tax – the biggest reason is that you could be on the wrong tax code.
The most common code for the current tax year is 1257L for people who have one job or pension. This means you can earn £12,570 in one tax year before being taxed, as this is the current personal allowance.
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But this tax code doesn’t apply to everyone. For example, if you have a second job, this will likely have a BR, D0 or D1 tax code, or if you have no personal allowance, you may have an 0T tax code.
You can find your tax code on your latest payslip, on your P45 if you have recently quit your job, or on GOV.UK if you have a Government Gateway ID. This is a 12-digit number that is free to sign up for, and it allows you to access UK government services online.
MoneySavingExpert.com has warned people to be aware of scammers trying to impersonate HMRC. They advised that HMRC will always send a letter about any tax you’re owed – it won’t text, email or call you.
If you’re due a refund, HMRC will either send you a text, or you’ll be asked to claim it online. MoneySavingExpert.com has said the correct link is always an official GOV.UK page.
You’ll need the reference number on your P800 letter and your National Insurance number. If your tax code has been wrong for a while, you can claim back up to four additional years.
HMRC may pay back further than four tax years under certain circumstances – for example, if it was their fault that you overpaid tax. If it turns out you’ve not paid enough tax due to an incorrect tax code, then you will have to pay this back.
Don’t let this put you off – it is better to sort this out sooner rather than later to avoid being hit with a bigger bill. You can try and get the tax written off if it was not your fault that you underpaid – but this is not a guarantee.
