UK employees are being advised they need to verify – and it is your accountability if you happen to get caught with a giant tax invoice.
HMRC says it is on you to verify your tax code is appropriate (Picture: Getty)
A brand new tax yr has begun this week and within the days and weeks that observe, His Majesty’s Income and Customs can be processing and issuing piles of latest tax codes to hundreds of employees.
Hundreds of thousands of persons are at the moment on the improper tax code, together with many common PAYE staff. It implies that you possibly can be paying an excessive amount of tax in your earnings, or too little. Each are dangerous as a result of if you happen to’re underpaying, HMRC will finally realise, and you possibly can find yourself with a sudden hefty tax invoice that you simply legally should pay. Whereas overpayment means you’re giving up wage that you simply don’t must, and it might take months for it to be noticed by the taxman.
Typically, HMRC will challenge new tax codes in the beginning of a brand new tax yr because it catches up together with your earlier yr’s earnings, however it might take months earlier than it occurs and it might additionally occur at any time within the yr. These letters with adjustments of tax code are referred to as P800 letters.
In response to analysis by Canada Life, the typical overpayment of tax is £689 within the UK, so if you happen to did overpay, you possibly can be owed as a lot as that again, or doubtlessly much more.
For most individuals, your tax code can be 1257L – that is the usual tax code for most elementary charge taxpayers incomes over £12,570 and you need to be capable of discover this in your weekly or month-to-month payslip if you have not acquired a P800 letter.
In case your tax code has ‘W1’ or ‘M1’ or ‘X’ on the finish – these are emergency tax codes. For instance, 1257LWI, 1257LMI, or 1257LX all complicate issues, often due to job adjustments or HMRC not being given the proper particulars.
In case your change in circumstances means you haven’t paid the correct quantity of tax, you’ll keep on the emergency tax code till you’ve paid the proper tax for the yr and you possibly can be owed cash – or you possibly can owe HMRC cash.
BR means all of your earnings is taxed on the fundamental charge – often that is for a second job. However D0 means the entire earnings is taxed at a better charge. D1 means all of your earnings is on the further charge (the topmost), and NT means you are not paying any tax on the earnings in any respect.
Talking on an episode of The Martin Lewis Podcast in January 2026, the cash knowledgeable Martin Lewis mentioned: “Are you aware what your tax code is? In the event you’re an worker you could, as a result of hundreds of thousands of them are improper every year and if they’re improper, legally it’s your accountability not your employer’s and never HMRC’s, to make sure it’s appropriate.”
He added: “It may imply you’re paying far an excessive amount of tax every year. You don’t need that. It may additionally imply, you’re paying too little tax. Sounds good? It isn’t, as a result of sooner or later they WILL catch up and be sure you pay the tax that you simply owe.
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“So you possibly can be hit, slapped throughout the face, with a giant tax invoice and never have the money to pay it, which is a nightmare.
“So, every year if you get your tax code you need to verify it, and if you happen to’ve by no means checked it earlier than, it’s price going and discovering it now and doing a verify.”
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