MILLIONS are missing out on hundreds of pounds - but a quick check could see you claw the money back.
Workers are paying £5.8billion more to HMRC than they should because they're on the wrong tax code, according to Canada Life.
A survey by the financial services company revealed 31% of adults have been on the wrong tax code at some point, with the average overpayment worth £689.
The survey also found one in six UK adults do not know if they are on the right tax code and 39% are not aware what any of the letters or numbers on their tax code mean.
Meanwhile, Canada Life found over two-thirds of those asked did not know how to claim back overpaid tax.
Anyone employed or paid via PAYE is given a tax code by their employer via HMRC. It is shown on your payslip.
You'll also have a code if you're receiving a private pension.
Your tax code dictates how much income tax you pay on your earnings - so it's important to check if you're on the right one.
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 recently, now is a good time."
How do I check my tax code?
You can check your tax code on your online personal tax account, via payslips, or on the HMRC app.
You can also, if you've received one, check your code on a "Tax Code Notice" letter from HMRC.
You'll need your Government Gateway ID and password to log in to your online personal tax account.
If you don't have this you can use your National Insurance number or postcode and two of the following:
a valid UK passport
a UK photocard driving licence issued by the DVLA (or DVA in Northern Ireland)
a payslip from the last three months or a P60 from your employer for the last tax year
details of a tax credit claim if you have made one
details from a Self Assessment tax return (in the last two years) if you made one
information held on your credit record if you have one (such as loans, credit cards or mortgages)
How to report a wrong tax code
If, after checking, you think you're on the wrong tax code, you can contact HMRC to tell them via phone on 0300 200 3300.
This is usually the quickest way to get a response. Or, you can send a letter to the following address: Pay as You Earn and Self Assessment, HM Revenue and Customs, BX9 1AS, United Kingdom.
If you are on the wrong tax code and have been paying too much, HMRC will change it so you pay the correct amount moving forwards.
They should also reimburse any tax you've already overpaid. If you've been underpaying tax, you will usually have to pay the money back over 12 months. But, only if you are earning enough over the personal tax allowance (£12,570) to cover the underpayment and owe less than £3,000. HMRC might get in touch with you to tell you you're owed a tax rebate too - they'll do this via a P800 letter or a simple assessment letter in the post.
But again, a P800 might tell you if you've not paid enough tax and have to pay it back.
A P800 letter will tell you if you can claim online through the Government's website, in which case you'll need your Government Gateway ID and password.
If you claim the money online it will be sent to your bank account within five days.
You can also claim your refund through the HMRC app.
If your P800 letter states you will be paid your tax rebate via cheque in the post, you should receive it within 14 days of the date on your letter. If you're owed tax from more than one year, you'll get a single cheque for the entire amount.
There are several reasons why you might be on the wrong tax code, including if you've started a new job and HMRC has not received your income details in time.
You might also be on the wrong code if you've started working for an employer after being self-employed, or you're working more than one job at a time. If you are on the wrong code, the tax office will often put you on an emergency tax code until you contact them about changing it.
Bear in mind, in some cases you might have been put on the wrong tax code and be underpaying and owe HMRC money. There are time limits in place to reclaim any overpaid tax, which is currently four years from the end of the tax year in which you are trying to claim.
So, if you're in any doubt you've overpaid tax, you should contact HMRC as early as possible.
Source: The Sun (thesun.co.uk)
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