More than 14 million people could be paying too much tax due to payslip errors - here's how to check; Find out how to check if you tax code is correct.
More than 14.3 million workers could be overpaying tax, and experts are warning them to check their tax code.
People may be overpaying by up to hundreds because of payslip errors, new figures show.
It may leave people deeply out of pocket - with many unaware of incorrect deductions or that they could be on the wrong code entirely.
That's according to accountancy software firmQuickBooks UKwhich claims 18% of employees - 5.9 million - fail to check their payslip each month while 22million believe tax errors are not their responsibility,the Mirror reports.
Tax codes apply to everyone who's employed or in receipt of a private pension. Each person's reference will reflect their own circumstances, such as what benefits they pay and whether they receive any relief.
In the UK, a quarter of all employees have four or more regular deductions from their gross pay, such as travel loans, childcare vouchers, student loans, gym memberships and medical insurance, which can account for many of these errors.
"Many of us can feel a bit lost when checking our payslips and feel unsure about the multiple factors that contribute to our adjusted pay," explained Shaun Shirazian, at accountancy firm Intuit QuickBooks UK.
"Taxes are complex and the research shows that significant overpaying of tax is caused by payroll issues, such as being on the wrong tax code, or errors with deductions such as childcare vouchers."
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.
It is tempting to assume that your code is correct, however mistakes happen, and it's your responsibility to flag it.
When reading your payslip, there are a few obvious red flags you should check for - starting with your name, address and National Insurance number. Flag any inaccuracies with your employer's HR or payroll department.
The next thing to check for is the letter at the front of your tax code. L is used for anyone getting the basic personal allowance - this is the most common. It means that you are under 65 and eligible for the standard tax-free personal allowance -- this is the amount you can earn before income tax kicks in (currently [pounds sterling]12,500 until April 2020).
P is used for those aged between 65 and 74 and getting the full personal allowance. Y is for those 75 or over and getting the full personal allowance. V is used for those aged between 65 and 74 and eligible for both the full personal allowance and the married couple's allowance.
K means you get no tax-free pay because your income exceeds your personal allowance.
T means HMRC needs further information so cannot allocate another code. BR means that you are taxed at the basic rate and DO means you are taxed at the higher rate without allowances (usually used for a second job or a pension).
An emergency tax code is issued if HMRC does not have enough information about you to send your employer the correct code. The first part of the emergency tax code for 2019/20 is 1250 - the same as the basic personal allowance code. However, there will also be either W1 (for weekly pay) or M1 (for monthly pay). This signifies that you are being taxed as if it is the first week or month of the financial year. You may be put on an emergency tax code if you change jobs.
If you earn less than [pounds sterling]12,500, you won't have to pay income tax - this will be indicated by the NT in your tax code.
You may also see NT if you're a self-employed contractor who is required to pay national insurance but not income tax.
With got a more detailed guide on what each tax code means, here.
If you think your tax code might be wrong, you can use HMRC's Income Tax service to have it reviewed.
If you cannot use the online service or your query is to do with an unexplained deduction, contact HMRC instead.
You could also speak to your employer - as it could be that they're missing some important, easily fixed, information, such as your P45 from a previous employer.
The good news is that if an error is identified, the money will be refunded back to you. If what you are owed is from the current tax year, then any money will be refunded through your monthly paypacket.
In other cases, it could be paid straight into your bank account - this is because you can claim back up to four years of overpaid tax.
Bear in mind though that while correcting a tax code could mean you're due a refund, it could also lead you to find out that you've underpaid.
If you find out that you owe money, how you go about paying it depends on the amounts involved - and who is responsible for the inaccuracy.
Tax codes apply to everyone who's employed full-time or part-time, or receiving a private pension
Firstly, check any basic details such as the spelling of your name, address and National Insurance number