As the new tax year approaches, personal finance expert Martin Lewis is urging millions of Britons to double-check their tax codes to ensure they are not overpaying. In a recent statement, Lewis emphasised the importance of keeping a close eye on this often overlooked but critical aspect of one’s financial affairs.
According to Lewis, it is estimated that around 6 million people in the UK are currently on the wrong tax code, resulting in them paying more than they should. This can happen for a variety of reasons, such as changes in employment, income, or personal circumstances that are not properly reflected in the tax system.
“People are often unaware that their tax code has changed, and they end up paying the wrong amount of tax,” Lewis explained. “This can have a significant impact on their monthly take-home pay and overall financial situation.”
To help people avoid this problem, Lewis is advising everyone to review their tax code as soon as possible. This can be done by checking the code on your payslip or contacting HM Revenue and Customs (HMRC) directly.
“The process is relatively straightforward,” Lewis said. “You simply need to compare your tax code with the information HMRC has on file for you. If there are any discrepancies, you should contact them immediately to get it resolved.”
One of the most common reasons for an incorrect tax code is a change in employment. When you start a new job, HMRC will issue a new tax code based on the information they have about your income and personal circumstances. However, if this information is not updated correctly, you could end up paying the wrong amount of tax.
Another common issue is the failure to notify HMRC about changes in personal circumstances, such as getting married, having children, or reaching retirement age. These events can all affect your tax code and the amount of tax you are required to pay.
“It’s really important that people stay on top of their tax affairs,” Lewis said. “Even a small mistake in your tax code can lead to hundreds or even thousands of pounds in overpayments over the course of a year.”
To help people navigate the process of checking their tax code, Lewis has provided a step-by-step guide on his website, MoneySavingExpert.com. This includes information on how to contact HMRC, what to do if you find an error, and how to claim a refund for any overpayments.
“By taking the time to review your tax code, you could potentially save yourself a significant amount of money,” Lewis said. “It’s a simple task that can have a big impact on your financial well-being.”
