Tax warning: Britons urged to look out for 'mistakes' which could result in HMRC charge

Tax 'mistakes' could see Britons paying more

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Patrick O'Donnell

By Patrick O'Donnell


Published: 10/09/2024

- 20:32

Experts are reminding taxpayers to check they are on the correct code on their payslips

Britons are being urged to be on the lookout for potential errors on their pay slip as it could lead to paying more income tax.

Errors in tax codes can lead to significant financial consequences, leaving people either out of pocket or facing unexpected bills.

Experts from Digital PR Lab are calling on workers to be vigilant about their how much money they are losing to the tax man. According to analysts, regular tax code checks are vital in order to avoid costly HM Revenue and Customs (HMRC) mistakes that may impact their finances.

What are tax codes?

Tax codes are a combination of letters and numbers that determine your tax-free income allowance.

For instance, the code "1257L" for the 2023-24 tax year indicates a Personal Allowance of £12,570 before tax is applied to remaining income.

Common tax codes include:

  • 1257L: Standard code for most taxpayers
  • BR: All income taxed at basic rate (20 per cent)
  • D0: All income taxed at higher rate (40 per cent)
  • 0T: No tax-free personal allowance

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How to check your tax code

  • Examine any pay slips: Someone's tax code is usually indicated on their payslip. Taxpayers are told to compare it to the code theywere given at the start of the tax year or when theychanged jobs.
  • Checking P45/P60 Forms: If someone has switched jobs recently, the P45 form should display their correct tax code. A P60 form will also show the code used during the tax year.
  • Use the Government's Online Tool: The UK Government provides an online tool through your personal tax account on GOV.UK that shows your current tax code and explains what it means.
  • Contact HMRC Directly: If someone is not sure whether their tax code is accurate, contact HMRC directly. They can investigate and make adjustments if necessary.

Why are tax codes sometimes incorrect?

  • If someone has to juggle multiple jobs and pensions
  • When someone's employer has made an inadvertent mistake in correct data may be reported to HMRC
  • Benefits in kind, like company cars, should be included in your tax code. Failing to account for these can lead to under- or overpayment of tax
  • Life changes, such as marriage or moving home, could see people making accidental overpayments and underpayments

Sophie Rhone, a workplace expert, Digital PR Lab, said: "Keeping an eye on your tax code and understanding its implications is essential for managing your finances effectively.

"Mistakes can happen, but by staying proactive and informed, you can catch errors early, avoid unexpected bills, and ensure you're not paying more than you should."

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What to do if you discover a tax error

Taxpayers are reminded to contact HMRC as soon as possible to update their personal or financial information.

Furthermore, they should be able to claim a refund they have overpaid any amount of money.

It is possible to discuss a manageable repayment plan with HMRC if they are underpaid.

According to Rhone, taking action quickly could minimise any detrimental financial impact.

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