Martin Lewis warns MILLIONS could be spending too much on tax - How to avoid simple error
Martin Lewis has warned of a simple mistake that could mean you are on the wrong code
Workers have been told to check their tax code as many could be paying too much income tax.
Martin Lewis has warned of a simple mistake that could mean you are on the wrong code, meaning many taxpayers may be spending more than they should.
If you are on the wrong code and have been for a while, it is possible to claim the money back.
If you have an ‘X’ at the end of your tax code, it could mean you’re paying emergency tax, a code people some people are put on if they have recently changed jobs.
Being under this bracket means you won’t get your tax-free personal allowance.
The MoneySavingExpert issued the warning on ITV, where he spoke to a viewer called Tina who had been overtaxed.
She was enquiring as to whether she was entitled to a rebate.
She said: “I’m on a 16 hour contract, and last month, I did lots of overtime.
“I was put on the basic rate temporarily and overtaxed by more than £800.
“My tax code is now back to 1257L but I’m short £500, worrying about money. Will I get a tax rebate?”
Employers use tax codes to figure out how much income tax to take from your pay.
Checking your payslips or asking your company’s human resources department is how you can ascertain which tax code you fall under.
Most are under 1257L, which is applied to basic-rate tax payers, who are those earning between £12,501 and £50,000.
Tax expert Rebecca Benneyworth said on the show that it is likely viewer Tina is on an emergency code.
She said: “It depends on whether she’s on a month tax code or not.
“Month one is quite often referred to as an emergency code.
“If she is, she needs to sort that with HMRC, either by phoning them, or going into her personal tax account through the HMRC app.
“On the tax code, she’ll have 1257L, if she’s got an X on the end, she’s on month one now.
“Otherwise if it’s not got an X on the end, it should comer back in her next pay packet. If it doesn’t, speak to your employer.”
Martin stated: If you’ve got an X, you’re on emergency tax, so you’re going to be paying more.
The tax office will often automatically place you on the emergency tax code until you contact to tell them otherwise.
Martin said millions are on the wrong code and could therefore be underpaying or overpaying.
While you may be in for a windfall from the taxman, there is also a risk you will owe more.
Checking your tax code is recommended in order to avoid this. It is normally listed near your National Insurance number on your payslip.
You can also use the Government’s online tax checker tool to view your tax code.
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