Consumer expert Sue Hayward’s savvy finance tips and advice
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Sue’s Guide To... How To Check Your Tax Code
Millions of us may be on the wrong tax code, say financial firm Hargreaves Lansdown. It means we could be paying too much tax, or not enough, which means paying extra further down the line.
Here’s my guide to understanding and checking your tax code, jargon-free.
◆ What is a tax code?
It may look like random numbers and a letter, but your tax code is important. It’s calculated by HM Revenue & Customs (HMRC) and helps your employer or pension company work out how much tax you should pay.
◆ Where can I find mine?
Your tax code is on your payslip. Check your code, and how much tax you pay, via the government website www.gov.uk/check-income-tax-current-year
◆ Crack your tax code The numbers in your tax code show how much you can earn before paying tax. Known as your personal allowance, this is £12,570 during the current tax year.
The most common tax code is 1257L. This means you’re entitled to the full personal allowance and often applies if you have one job or pension, and don’t owe unpaid tax.
◆ What do the other letters mean?
If your tax code has a “W1”, “M1” or “X” at the end, it’s an emergency one, often used if you change jobs and your new employer can’t get your old tax code fast enough.
A “K” in your code can mean you’re repaying tax owed from past years.
SUE’S TIPS:
◆ Think your tax code is wrong? Call HMRC on 0300 200 3300. Lines are open weekdays from 8am-6pm.
◆ Act now! The tax year ends on April 5 2024, so you have a chance to get things fixed before the next tax year.
◆ If your tax code changes, you’ll get a tax code notice by post from HMRC. Ignore scam emails promising tax rebates. If you’re owed money, HMRC writes to you.
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