Wrong Tax Code? How to Fix It and Claim Your UK Refund
Discover how to correct a wrong tax code in the UK, reclaim overpaid tax, and understand your rights as an employee or freelancer.
Are You Paying Excessive Tax Because of a Wrong Tax Code?
Have you ever felt your payslip just did not add up? Countless workers in the UK are given the wrong tax code every year and paid far too much tax. An incorrect tax code can take a major bite out of your take-home pay whether you work full-time, part-time, freelance, or have a sideline business.
In this clear guide, we shall examine how to identify if your tax code is wrong, simple steps to correct it, and how to reclaim the overpaid tax from HMRC. Once finished, you will be able to confidently take control of your financial situation and ensure the right taxation of yourself.
How to Check if Your Tax Code has Been Incorrectly Assigned to You
Knowing Your UK Tax Code
A tax code indicates how much income you may earn tax-free in a financial year. The tax-free personal allowance for 2024/25 is £12,570, and usually, this is scribbled down on the payslip as 1257L.
Signs of an incorrect tax code include:
- A sudden drop in pay for no apparent reason.
- The use of the tax code ending in "W1," "M1," "X" for emergency taxes.
- A tax-free allowance that is different from £12,570, barring a change in your circumstance.
Why Does HMRC Assign Wrong Tax Codes?
HMRC assigns wrong tax codes due to a variety of circumstances, such as:
- New jobs taken recently
- Handling two or more jobs or income streams
- Freelance and self-employed income
- Errors on the side of an employer, or perhaps HMRC itself
How to Fix a Wrong Tax Code
1. Check Your Tax Code Online
Log into your Personal Tax Account on GOV.UK to view your current tax code. Verify details like employment status, income sources, and allowances.
2. Call HMRC without Delay
Whenever your tax code looks wrong, take an immediate call to HMRC:
- Online by going to your Personal Tax Account.
- Phone: Call the HMRC tax helpline on 0300 200 3300.
- Hold on to your National Insurance number and your payslips.
3. Up-Rate Employment Details
Ensure that HMRC has accurate details regarding your employment or self-employment status. This is important if you have changed jobs or started some freelance work.
Applying for a Tax Refund for Overpaid Tax
How Much Could You Claim?
The sum depends on one's particular situation. Some in the UK who had money deducted in error claim hundreds or thousands of pounds, especially if an incorrect code had been active for several months or even years.
The Applying Process
To apply for a refund:
- Online: Apply using your Personal Tax Account.
- By Form: Fill in and send form P50 by mail.
Generally, refunds are paid within five weeks of receipt of the refund claim.
Examples of Common Cases
Case 1: Emergency tax ("BR" or "W1/M1")
After recently beginning a second job and being put on an emergency tax code, John checked his payslip and immediately made direct contact with HMRC from his online account. Correction was made in John's favour; he successfully claimed £320.
Case 2: Freelance income misreported
Some of Maria's freelance earnings were subjected to PAYE deductions by mistake. Once she made contact with HMRC to correct her employment status, she was able to reclaim £1,200.
Frequently Asked Questions
Can My Employer Fix My Tax Code?
Your employer uses the tax code that HMRC provides to them. In other words, they cannot change it, but they can assist in recognizing that something is wrong and advise you to contact HMRC.
How Long Do I Have to Claim Back Overpaid Tax?
You have four years from the end of the tax year in which the overpayment occurred to claim back your overpaid tax.
Can I Get Interest on My Refund?
Yes. If there is undue delay in the refund, HMRC pays interest to make sure the reclamation of overpaid tax is fair.
Get Your Tax Back on Track Today!
It does not have to be complicated to fix your tax code. By checking your payslip regularly, dealing with HMRC directly, and knowing your rights, you can see tax code problems fixed quickly and get any overpayments back.
Start acting today and save your money-worth in taxes-you will need it in the bank!
With the salary calculator, you will even be able to set a complete financial plan!