You should check the tax code issued to you by HMRC (the tax office) has been applied correctly against your salary by your employer.
If the tax code applied to your pay is incorrect and too high, you will not pay enough and if it is too low you will pay too much income tax.
What is a tax code?
Anyone who is employed or receives income through PAYE is given a tax code by HMRC. PAYE stands for Pay As You Earn and is the system used by HMRC to tax people who are employed, or receiving other income such as a pension.
PAYE tax is collected by your employer and sent to HMRC every week or month. The amount of tax you pay is worked out through the tax code you are given.
Paying tax through PAYE means any income tax due is deducted straight from your wages before you are paid.
PAYE and your tax code
Your PAYE tax code is important and lets your employer (or pension provider) know how much tax to deduct from your salary/pension. HMRC will tell your employer (or pension provider) what your tax code is each tax year or when you have a change in circumstances.
As an employed person it is important to understand and check your income tax code. HMRC places the responsibility on you to check your own code.
If your tax code is found to be wrong at a later date, you could miss out on a tax rebate, or have to pay an unforeseen tax bill.
You can find your current tax code on a recent payslip.
What is the 2023-24 tax code?
The 2023/24 tax year starts on 6 April 2023.
The basic 2023-24 tax code is set at: 1257L and is the same standard tax code as the previous tax year and is scheduled to be kept at this level until 2026. 1257L is the tax code everyone will start with and then your tax code can change either upwards or downwards depending on your circumstances.
A 1257L tax code allows you to earn £12,570 before you will be required to pay any income tax.
What should I do if I think my tax code is wrong?
If you think your tax code is wrong, you should contact HMRC as soon as you can to allow for it be checked and changed where necessary.
The tax system isn’t perfect because when personal circumstances change HMRC is not always made aware until a later date (if at all).
You can phone HMRC on 0300 200 3300 to discuss your tax code with an advisor who can make amendments where appropriate.
Please also see the link to the HMRC Income Tax: general enquiries website
Where can I get help with a tax problem?
Regrettably Usdaw cannot provide personal advice on tax issues, but we provide general information about Pensions and Tax. Please refer to the Usdaw Pensions and Tax Guide;
There are several charities that may be able to assist you by providing information and assistance.
The Low-Income Tax Reform Group (LITRG)
LITRG provides help and information for those least able in the community to afford to pay for advice. The LITRG has a dedicated website where there is comprehensive information concerning tax and benefits, however, they may be unable to provide specific advice relating to your personal tax situation.
The LITRG website is aimed at people on low incomes and mainly covers areas of the tax system (and related benefits) that they consider may be most relevant to people on low incomes and make them accessible for their needs.
The LITRG website also provides information about other Charities and welfare rights advisors, who may be able to provide help and advice with tax and benefits problems.