Households across the UK are being urged to check their P60 statements carefully when they arrive in the coming weeks. An incorrect code on these important documents could mean you are owed money by HMRC.
Why Your P60 Matters
Your P60, which must be issued by employers before the May 31 deadline, summarises your total pay and the tax you have paid over the tax year. The critical detail to examine is the "final tax code," typically displayed near the top of the document.
The standard tax code for most workers is 1257L, which indicates you are entitled to the full personal allowance of £12,570 before any tax is deducted. However, if your code is different, you could be overpaying tax and entitled to a refund.
Codes That Signal Overpayment
According to experts, the average overpayment due to incorrect codes is around £700. Here are the codes to watch out for:
- BR: All your income is taxed at 20% with no tax-free allowance.
- D0 or D1: Your income is taxed at higher rates without any allowance.
If your code does not include the letter 'L', you may not be receiving the standard £12,570 personal allowance. While these codes are not always mistakes, they often appear if you have recently changed jobs, work multiple roles, or have done contract or freelance work. It could also mean that HMRC does not have up-to-date information, leading to incorrect taxation.
Expert Advice
Robert Jones, CEO of the tax refund company Swift Refunds, previously stated: "Your P60 isn't just a year-end summary, it may also be a warning sign. Check your P60, especially your tax code. If it's anything other than 1257L, or you've switched jobs or had multiple employers, you could be owed money."
What to Do If You Spot an Error
If you believe your tax code is incorrect, you should contact HMRC directly or use the government's online tax account to check and update your details. You may be able to claim a refund for overpaid tax quickly and easily.
