CHECKING your tax code only takes seconds, and failing to do so can be costly – as Martina Brannigan discovered.
If your code is wrong, you may end up paying hundreds more than you need to and likely getting a refund.
Martina Brannigan owed £400 after being placed in the wrong tax code
Your tax code determines how much income tax you pay on your earnings – so it’s important to get the right one.
In February, 25-year-old Martina Brannigan from Newcastle discovered she had been given the wrong tax code after starting a new job.
Martina quit her old job in December after five years and started a new job in the financial world in the same month.
She was still owed money from her old employers of 97 hours of accrued holiday pay, which would be paid out in January.
But after a wage error, the payment was not made and instead she got the money in February.
When Martina got her monthly pay slip for a new job, she found her pay was £400 less than the previous month.
In a panic, Martina looked at her tax code and saw the letters “BR” – which is usually given to someone who has more than one job.
The code means that you will not receive a Personal Allowance, so everything you earn will be taxed at 20% (BR stands for basic rate).
Martina had been given this code because of her old job’s vacation pay, and her new pay made it seem like she had two jobs at the same time.
She contacted HMRC through her Government Gateway account and in early April received a letter with her new tax code and a refund of £400.
Martina told The Sun: “It was a bit of a nightmare. I was short on my bills for two months.
“My monthly bills are usually around £700, including my mortgage payments and my utility bills – but I couldn’t pay them, so I had to take £2,000 out of my savings.
“I spent my credit cards to pay for my regular expenses like gas and food.
“It was such a relief when I got the letter that it was settled and that I now have my finances back in order.
“I had never checked my tax code before, but from now on I will make sure to check every month.”
The Sun has contacted HMRC for comment.
It is your responsibility to check and let HMRC know if it is wrong or you could end up paying too much like Martina.
But always remember that you may be underpaying and have to pay it back.
What are the different tax codes?
Tax codes on your payslip tell you how much you have to pay to HMRC each month.
Here’s our guide to what each of the letters means:
L – You are entitled to the standard untaxed Personal Allowance
m – Marriage allowance: you received a transfer of 10% of your partner’s personal allowance (£1,260)
N – Marriage allowance: you have transferred 10 percent of your Personal Allowance to your partner
S – Your income or pension will be taxed at the rates in Scotland
T – Your tax code contains other calculations to calculate your personal deduction, for example it has been reduced because your estimated annual income exceeds £100,000
0T – Your personal allowance (currently £12,570) has been used up, or you have started a new job and your employer does not have the details necessary to provide you with a tax code
BR – All your income from this job or pension will be taxed at the basic rate (usually used if you have more than one job or pension)
D0 – All your income from this job or pension will be taxed at the higher rate (usually used if you have more than one job or pension)
D1 – All your income from this job or pension will be taxed at the addition rate (usually used if you have more than one job or pension)
NT – You do not pay tax on these income Tax codes starting with K means that you have income that is not taxed in any other way and that is worth more than your tax-free allowance
You can have the wrong tax code for several reasons, such as if you change jobs or if your salary goes up or down.
Sometimes HMRC has not received this information and will assume that your circumstances have not changed.
It’s always worth checking your tax code if you’ve changed jobs or had a salary change to make sure you’re paying the correct amount of tax.
How do I check my tax code?
You can check your tax code online on your personal tax account, on any payslips or on the HMRC app.
If you have one, you can also check for a “Tax Code Notice” letter from HMRC.
Please note that you may need to have your Government Gateway ID and password ready to log in.
But if you don’t have this, you can use your social security number or zip code and two of the following:
a valid UK passport a UK photo card driving license issued by the DVLA (or DVA in Northern Ireland) a payslip for the last three months or a P60 from your employer for the last tax year details of a claim for tax relief if you have made one details from a self-assessment tax return (within the past two years) if you have completed one information about your credit record if you have one (such as loans, credit cards, or mortgages)
What should I do if it’s wrong?
If after checking you think you are using the wrong tax code you can contact HMRC to tell them by telephone on 0300 200 3300.
This is usually the fastest 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 have the wrong tax code and have overpaid, HMRC will change it so that you pay the correct amount from now on.
They must also refund any tax you have already overpaid.
It is always worth noting that you can also contact HMRC about an incorrect tax code and realize that you have underpaid them.
In this case, you usually have to repay the money in 12 months.
But only if you earn enough income above the personal allowance, which is currently £12,570, and owe less than £3,000 back.
HMRC may contact you to tell you that you also owe a tax refund – they will do this via a P800 letter or a simple postal assessment letter.
But again, a P800 can tell you if you haven’t paid enough tax and need to pay it back.
A P800 letter will tell you if you can claim online through the government’s website.
If you can claim online, you will need your Government Gateway ID and password.
If you claim online, the money will be deposited into your bank account within five days.
You can also claim your refund through the HMRC app.
If your P800 letter indicates that you will receive your tax refund by check in the mail, you will receive it within 14 days of the date on your letter.
If you owe taxes for more than a year, you will receive one check for the full amount.
Do you have a money problem that needs to be solved? Get in touch by emailing money-sm@news.co.uk
