How to check your tax code – and you could be owed HUNDREDS of pounds
YOU could be owed hundreds of pounds from the taxman simply by having the wrong code on your payslip.
But you can claim back this cash by checking you're paying the right amount of tax – here's how.
It comes as Brits who are due a refund will see letters from HMRC confirming the repayment land through the letterbox this month.
This tax year has seen some of the tax codes change, so it's a good idea to get clued up on what they mean – otherwise you could be out of pocket.
If you've recently moved jobs, not given your new workplace your P45 or filled in a starter checklist form, you might find you've been put on the wrong code.
If this happens, the tax office will automatically place you on the emergency tax code until you contact them to tell them otherwise.
We explain how to check your tax code – and how to claim any money back that you're owed.
What is a tax code?
A tax code is usually made up of a combination of numbers and letters and is used by employers and pension providers to work out how much income tax you should pay.
Your company will take the sum of money from your paycheck before if arrives in your account.
Most of us who are basic-rate taxpayers (because we earn less than £37,500 a year) can earn £12,500 between April 2019 and April 2020 before paying tax. This is called your personal allowance.
The standard tax code for basic-rate taxpayers is 1257L – you can work out what your personal allowance is by multiplying this by 10.
So you can earn £12,750 without paying tax on it.
How do I check my tax code?
Although most of us will be on the basic-rate taxpayer code, it's worth checking whether yours is right.
Brits will have had letters arrive in the post from February telling them what their tax code is for the 2021/22 tax year.
This year's tax year started April 6 2021 and runs until April 5 2022.
But if you didn't get a letter, or can't find where it is, there are a number of ways you can check what your tax code is for the current tax year.
Your tax code will be displayed on your payslip, usually listed near your National Insurance number.
Your company has to provide you with a payslip, so if you’re not sure how to access it, ask your employer for guidance.
You can also use the government's online tax checker tool to view your tax code.
How do I find out if my tax code is wrong?
You can check if your tax code is correct by using HMRC’s online tool or MoneySavingExpert’s free online tax calculator.
If it's wrong, contact HMRC to let it know on 0300 200 3300. If it's right, you don't need to do anything.
HMRC will write to you or email you if they change your tax code – and they will also write to your employer about any changes too.
Then, your updated tax code should show on your next pay slip.
How do I know if I’m owed a tax refund?
If you are due a tax rebate HMRC will let you know by sending you a letter called a P800 or a simple assessment letter.
P800 letters can also tell you that you haven't paid enough tax, so don't get your hops up when one comes through your letter box.
You will only get a P800 after the tax year has ended – and the letter won't usually arrive until around September.
That means you should keep an eye on your letter box – it could come through soon.
This letter will tell you if you can claim online through the government's website.
If you claim online the money will be sent to your account in about five days.
Or you can wait for 45 days and the government will send you a cheque in the post.
How much could I get?
How much you could get back depends what tax code you were put on, your salary, and how much tax you should have been charged.
But in some cases, you could be owed hundreds – or even thousands – of pounds.
You can ask for help from organisations from Citizens Advice or TaxAid if you're struggling to work out how much you could get back.
A rise in National Insurance rise add hundreds of pounds a year to tax bills for Brits.
Tax rises are usually announced in the Chancellor's annual Budget, with Rishi Sunak announcing a 25% corporation tax hike in March.
The Budget in March followed several emergency Budgets by Rishi Sunak to get the country through the coronavirus pandemic.
We pay for your stories!
Do you have a story for The Sun Online Money team?
Email us at [email protected]
Source: Read Full Article