Brits are urged to make a vital check to ensure they are paying the correct amount of tax as the new tax year starts. The new tax year began on April 6 and will run until April 5, 2026. In the lead-up, HMRC sent out emails to taxpayers to remind them to prepare for the change.
The main preparation Brits needed to make was to check their tax code. Tax codes are made up of a series of numbers and letters and are assigned to you by HMRC based on the information it has on your income.
This information is provided to HMRC by your employer or pension provider. The code dictates how much of your income is taken in tax, and everyone who is paid through PAYE has one.
If your code is incorrect, you risk either paying too much tax – or not enough. If you are not paying the right amount you will either receive a tax rebate from HMRC or be slapped with an extra tax bill. The amount will depend on how long your tax code has been wrong.
It’s a common misconception that employers are in charge of making sure your tax code is correct. However, it is not, and it is down to the worker to make sure everything is right and up to date.
According to research from Canada Life, nearly one in five UK adults have never checked their tax code, and those who have done so have only done so on average once every 16 months. Brits most commonly check for no specific reason (19%) or out of habit (17%), but others have done so due to a job change (12%) or having been on the wrong tax code before (8%).
Among all the 2,000 UK adults polled by Opinium for the research, fewer than half know whether their tax code is currently correct. Almost four in 10 don’t know what any of their tax code means – leaving them at a disadvantage.
WHATSAPP GROUP: Get money news and top deals straight to your phone by joining our Money WhatsApp group here. We also treat our community members to special offers, promotions, and adverts from us and our partners. If you don’t like our community, you can check out any time you like. If you’re curious, you can read our Privacy Notice.
NEWSLETTER: Or sign up to the Mirror’s Money newsletter here for all the best advice and shopping deals straight to your inbox.
John Chew, tax and estate planning specialist at Canada Life, said: “Understanding your tax code is vital to ensure you’re paying the right amount of income tax. Those who are not on the right code may find themselves out of pocket. If it’s wrong, you may end up contributing more or less than you’re supposed to. So, if you haven’t checked your tax code(s) recently, now is a good time.”
The most common tax code is currently 1257L, and this is used if you have one source of income – either through a job or pension. Those with this tax code can earn £12,570 a year, which is currently the standard personal allowance, before paying income tax.
Tax codes start with an “S” in Scotland and a “C” in Wales, and if you have a second job – or multiple forms of income – your tax code will be different.
To make sure your tax code is correct, you should be aware of what the different tax codes are, the numbers represent how much you earn tax free, which is just the personal allowance and the letters relate to a taxpayer’s situation and how it alters the personal allowance. The letters include:
You can find your tax code on your payslip, a P45 if you have recently left a job or a P60 if it is the end of a tax year – you can also find your tax code online at Gov.uk. if you think your tax code is wrong, you need to contact HMRC directly.
For all you savvy savers and bargain hunters out there, there’s a golden opportunity to stretch your pounds further. The Money Saving Club newsletter, a favourite among thousands who thrive on catching the best deals, is stepping up its game.
Simply follow the link and select one or more of the following topics to get all the latest deals and advice on: Travel; Property; Pets, family and home; Personal finance; Shopping and discounts; Utilities.
At Reach and across our entities we and our partners use information collected through cookies and other identifiers from your device to improve experience on our site, analyse how it is used and to show personalised advertising. You can opt out of the sale or sharing of your data, at any time clicking the “Do Not Sell or Share my Data” button at the bottom of the webpage. Please note that your preferences are browser specific. Use of our website and any of our services represents your acceptance of the use of cookies and consent to the practices described in our Privacy Notice and Cookie Notice.
