11 codes on payslips that reveal if HMRC owes you a tax refund 

WORKERS can scour their payslips to discover if they are due a tax refund that could be worth thousands of pounds.

HMRC codes indicate the level at which you are being taxed on your income.

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If your code isn’t correct for your financial circumstances, you could be paying more in tax than you should be and may be owed money back.

The code you need to look out for is a mixture of numbers and letters.

If you realise you’re paying the wrong amount in tax, you can claim back overpaid cash for up to four years after.

However, the onus is on you to check that it’s right and let HMRC know if there is a discrepancy.

Here we explain what each code means so you can work out if you’re being taxed the correct amount.

Plus, how to challenge your code if you realise that it’s wrong.

TAX CODES EXPLAINED

The letters at the start of your tax code all mean something different and will show whether you are entitled to the personal allowance. This is the amount you can earn each year before being taxed and it currently stands at £12,570.

• L – You’re entitled to the standard tax-free Personal Allowance. The common tax code is 1257L.
• M – Marriage Allowance: you’ve received a transfer of 10% of your partner’s personal allowance (£1,257)
• N – Marriage Allowance: you’ve transferred 10% of your personal allowance to your partner
• S – Your income or pension is taxed using the rates in Scotland
• T – Your tax code includes other calculations to work out your personal allowance, for example, it’s been reduced because your estimated annual income is more than £100,000
• 0T – Your personal allowance has been used up, or you’ve started a new job and your employer doesn’t have the details they need to give you a tax code
• BR – All your income from this job or pension is taxed at the basic rate (usually used if you’ve got more than one job or pension)
• D0 – All your income from this job or pension is taxed at the higher rate (usually used if you’ve got more than one job or pension)
• D1 – All your income from this job or pension is taxed at the additional rate (usually used if you’ve got more than one job or pension)
• NT – You’re not paying any tax on this income
• Tax codes starting with K mean you have income that isn’t being taxed another way and it’s worth more than your tax-free allowance

There are different reason you could be on the wrong tax code. Often an error can be made if you change your or your salary changes.

HMRC might not have been given updates relating to new circumstances.

You should check your tax code when you move jobs or if you have a change in salary to make sure you’re still paying the right amount.

What if my tax code is wrong?

If you think you might be on the wrong tax code, contact HMRC. You can call them on 0300 200 3300.

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 are on the wrong tax code and have been paying too much, HMRC will change it so you pay the correct amount moving forwards.

You should then be reimbursed for any tax you’ve overpaid.

You could, however, contact HMRC about an incorrect tax code and find you have underpaid tax.

In this case, you will usually have to pay the money back over 12 months.

But, only if you are earning enough income over the Personal Allowance, which is currently £12,570, and owe less than £3,000 back.

HMRC might get in touch with you to tell you you’re owed a tax rebate, too.

In this case, you’ll get a P800 letter or a simple assessment letter in the post.

A P800 might tell you if you’ve not paid enough tax and have to pay it back. It will say if you can claim online through the government’s website.

If you can claim online, you’ll need your Government Gateway ID and password. The money will then be sent to your bank account within five days.

You can also claim your refund through the HMRC app.

If your P800 letter tells you you will be paid your tax rebate via cheque in the post, you should receive it within 14 days of the date on your letter.

If you’re owed tax from more than one year, you’ll get a single cheque for the entire amount.