HMRC has issued a fresh reminder to nearly one million individuals who are owed an average of £473 in tax rebates. In a recent Instagram post, the tax authority highlighted that many people have not yet claimed the money they are due after overpaying income tax.
Why You Might Have Overpaid Tax
There are several reasons why you may have paid too much income tax. The most common cause is being assigned an incorrect tax code. Tax codes determine how much tax is deducted from your salary before you receive it. The standard code for most people with one job or pension is 1257L, but not everyone is on this code.
Other reasons for overpayment include starting a new job, receiving incorrect information from HMRC about your income, or changes in your circumstances. If you have overpaid, HMRC will typically send you a P800 tax calculation letter explaining how to claim your refund.
How to Claim Your Refund
You can usually claim your refund online through the HMRC app or website. Alternatively, you can wait for a cheque to be sent to you by post. HMRC stated: “Remember getting a letter about a tax refund but didn’t do anything about it? Last year, almost 1 million people didn’t claim back the money they’re owed.”
To find your tax code, check your latest payslip or your P45 if you have recently left a job. If you believe you have overpaid, contact HMRC by calling 0300 200 3300 or via the HMRC app.
What If You Have Underpaid Tax?
If you have underpaid tax, you will owe HMRC money, which must be repaid. It is advisable to address this promptly to avoid a larger bill later.
Understanding Tax Codes
Tax codes can be confusing. Here are some common codes and what they mean:
- 0T – Used when an employee has not provided a P45 or sufficient details, or when Personal Allowance is exhausted.
- BR – For a second job or pension.
- C – For employees whose main home is in Wales.
- L – For employees entitled to the standard tax-free Personal Allowance.
- M – For employees whose spouse or civil partner has transferred some of their Personal Allowance.
- N – For employees who have transferred some of their Personal Allowance to their spouse or civil partner.
- NT – No tax is deducted.
- S – For employees whose main home is in Scotland.
- T – When HMRC needs to review some items with the employee.
If your tax code is incorrect, you could be owed a refund. Check your code and claim what is rightfully yours.
