Hidden Payslip Error Could Mean HMRC Owes You £943

A staggering number of UK workers could be entitled to a tax refund due to incorrect tax codes and unclaimed work expenses. According to official data, HM Revenue and Customs (HMRC) refunded a total of £8.3 billion in overpaid taxes to over eight million workers in the 2022/23 financial year, averaging £943 per person.

With millions of people potentially affected, understanding your tax code and checking for errors on your payslip could help you reclaim money that is rightfully yours.

Why Are Workers Overpaying Tax?

Several common factors contribute to tax overpayments, including:

1. Incorrect Tax Codes

A tax code determines how much tax an individual should pay, but errors can occur if HMRC is not updated about employment changes, multiple jobs, or salary adjustments. If an employer uses an incorrect tax code, employees may end up paying more tax than necessary.

The most common tax code for employees is 1257L, which allows a personal tax-free allowance of £12,570. If your tax code is different and you are unsure why, it may be worth investigating.

You can check your tax code by logging into your HMRC Personal Tax Account or reviewing your latest payslip.

2. Unclaimed Work Expenses

Many workers fail to claim tax relief on work-related expenses, such as uniforms, tools, travel costs, or professional fees. Employees can claim tax relief for these expenses through HMRC’s official tax relief service.

For instance, uniformed workers such as nurses, police officers, and construction workers who must clean or repair their work attire at their own expense may be eligible for a tax refund.

How to Check if You Are Owed a Refund?

To determine whether you have overpaid tax, follow these steps:

1. Check Your Tax Code

Your tax code is listed on your payslip and affects the amount of tax deducted from your salary. If you believe your tax code is incorrect, contact HMRC to update it.

• Online: Through your HMRC Personal Tax Account
• By phone: Call HMRC’s helpline at 0300 200 3300
• By post: Send a letter to HMRC with details of your employment and tax code concerns

2. Look for a P800 Letter from HMRC

HMRC issues P800 letters when they detect overpaid tax. These letters are usually sent at the end of the tax year. If you receive one, follow the instructions to claim your refund.

If you believe you are due a refund but have not received a P800, you can check your tax records on HMRC’s website or contact HMRC directly.

3. Claim Backdated Tax Refunds

If you have been overpaying tax, you can claim a refund for up to four tax years. For example, in 2024, you can claim back overpaid tax from the 2019/20 tax year onwards. To apply for a refund, use HMRC’s tax refund portal.

How to Prevent Overpaying in the Future?

To avoid overpaying tax in the future, follow these simple steps:

• Regularly check your tax code on your payslip and ensure it aligns with your employment status
• Update HMRC when you change jobs, receive a pay increase, or have multiple sources of income
• Claim all work-related tax reliefs for which you qualify
• Keep records of work expenses and tax codes to spot discrepancies early

What to Do if You Are Owed a Refund?

If HMRC confirms that you are due a refund, you can receive it through one of the following methods:

• Bank Transfer: If you apply online, HMRC can transfer the refund directly to your bank account
• Cheque: HMRC may send a refund cheque by post, which can take a few weeks
• Payroll Adjustment: If the error is caught in the current tax year, your employer may adjust future payslips to correct the overpayment

To start the process, visit HMRC’s refund page and follow the steps for submitting a claim.

Final Thoughts

With over eight million workers affected and an average refund of £943, it is crucial to check your tax records to ensure you are not overpaying. A small error in your tax code or an unclaimed work expense could mean HMRC owes you money.

By staying informed and proactive, UK workers can reclaim overpaid taxes and prevent future mistakes. Checking your payslip regularly and understanding your tax code are simple yet effective ways to ensure you are paying the correct amount of tax.

For further information, visit the official UK Government’s Tax Portal to check your tax status and claim any refunds owed to you.

This article has been carefully fact-checked by our editorial team to ensure accuracy and eliminate any misleading information. We are committed to maintaining the highest standards of integrity in our content.