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Free Tax Code Calculator Find if you're owed a tax rebate

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Don't get beaten by the systemIt looks like an innocuous set of digits, but your tax code has a critical impact on your finances as it tells your employer how much tax to take. Millions of people have been hit by errors - and some are due £1,000s back.

This guide includes the Tax Code Calculator to ensure you're on the right tax code, and how to reclaim overpaid tax back. And for those who've underpaid, it explains what you can do if they want you to pay it back.

Thanks to Tony Tesciuba (Tesciuba Ltd) & Matthew Brown (Chartered Inst of Taxation) for feedback/suggestions. Every effort's been made to ensure accuracy, yet this guide isn't authorised, tailored tax advice (get help here). We can't take responsibility nor accept liability for damage or losses; you use the info at your own risk.

Who has a tax code?

Who doesn't?

Full or part time employees
AND/OR
Those receiving a private pension

Fully self-employed or unemployed
OR
Receiving ONLY a state pension

What's a tax code?

On the face of it, a tax code is a dull and harmless series of numbers and letters - 1000L, BR and K497 are just some examples.

But these hieroglyphics are used by your employer to calculate the amount of tax that should be deducted from your wages or pension before they hit your bank account.

Therefore if you pay tax through PAYE, the tax code tells your employer or pension provider what it should take - and even small errors can lead to mistakes of £100s.

So the aim here is to find your tax code and decipher what it means, to see if it's correct. Don't worry, we'll take you through it simply.

Then you can punch it into our unique tax code calculator which will give you a steer on whether you may have over- or underpaid. Finally, and most importantly, the guide will explain step-by-step what to do about it...

Quick questions

Why so many mistakes?

How likely is this to affect me?

Important! Have you changed address and not told HMRC?

This isn't small change - people have reclaimed £5,000+!

Since launching this guide in late 2010, we heard of a blast of successes after MoneySavers used the Tax Code Calculator! We'll let some lucky forumites take over the tale. Please tell us about your tax rebate successes.

"Seeing the email, I thought I'd check mine as I had my payslip handy and I was surprised to see my code was BR. Digging out older slips, I saw I'd been on basic rate tax since I started, which seemed odd."

"Quick call to HMRC confirmed I'm an 810L - they've refunded just under £1,500 for last year and are updating my employer, so I'll be £130 better off each month going forward!"Golddustmedia

I got the MSE email, checked my tax code, rang HMRC and it told me I'd get between £5,000 and £7,000 back. Incredible!

"It's all because it'd been deducting for a company car and medical insurance that I've never had in this job." Chris Kendall

I've rung HMRC and a letter is in the post. I've been on the wrong tax code and paying too much since 2005!

"I've had a cheque for £3,698 dating back to 2006 and that's not including this year's return either! I'm very happy indeed and would of been none the wiser had it not been for MSE so thank you very, very much and for once I'm looking forward to Christmas! nat21luv

Step 1. Finding your tax code/what it means

Taking on your tax code is not an appealing task for even the most dedicated MoneySavers. But it doesn't have to be that gruelling.

How do I find my tax code?

It's listed on your 'coding notice', payslips or P45s. The most important thing to remember is...

Each income source (job, private pension) will have different tax codes. Check them all!

If you need more help finding your code, see the tax code finding tips.

What does my code mean?

Tax codes are made up of two main elements, which determine the amount of tax your employer will take. If you work for multiple employers (or work and also draw a pension), you'll have more than one code.

Here is a classic example of a tax code (similar ones for past years include 810L and 944L). It will usually be made up of numbers and letters:

What SHOULD your tax code be?

This is where you need to switch on your brain. The key bit to check it's correct is the number...

  • Find your personal allowance
    The first thing that HMRC does to establish your tax code is to tot up all of your tax allowances - in other words how much you can earn before you start to pay tax. In many cases this will be just your personal allowance.

  • Are there any deductions?
    Any income you haven't paid tax on at source is known as your deductions. The usual suspects are taxable employment benefits or extra income, eg, renting out a property or State Pension.

    Common taxable benefits include discounted rent or household bills, vehicle usage, medical insurance, some travel costs, payment in vouchers and goods bought on company credit cards.
  • Use these to make the number in your tax code
    These deductions are subtracted from the total amount of tax allowances you get (probably your basic personal allowance), and what's left is the total amount of tax-free income you are permitted in each tax year.

    HMRC then removes the last digit of this number (so 1000 in the case of the standard £10,000 personal allowance) - and hey presto! You've established the number part of your tax code.

In the majority of cases, these numbers will be followed by a letter. And this letter will vary according to your particular circumstances.

Keep up to date on overpayment issues We'll provide updates as part of the free weekly MoneySaving email

Step 2: The Tax Code Calculator

To try to help you work out whether your code's correct, we've devised an easy-to-use calculator to give a ROUGH answer (it's impossible to be exact). If it seems to be wrong, it shows it could be worth taking action to check out whether you're owed cash (or will be asked to pay back).

Key fact:
Under 65, have one employer (& no employee benefits) and earn under £100,000? Your 2014/15 code should probably be 1000L.

Before using the tax code calculator

HMRC's famous slogan that 'tax doesn't have to be taxing' is well-intentioned but is rarely true. If you don't fit the average working mould, click on the following boxes for an explanation of how your situation differs - it may explain any discrepancies in the code. There's lots of extra info on the HMRC and Gov.uk websites too.

I have more than one job

The amount of tax you pay is based on your total income for the tax year - whether this is from one, two or more jobs, interest on savings or rental income from a second property that you own. But you will still only have one personal allowance (the amount you can earn before tax) for all of them.

You will be issued with a separate tax code for each job - and these are likely to be different. For example, if your main income does not take you above the basic 20% rate of tax, you may be on a 1000L tax code for your main job and a BR code for your second job.

Or if you work four days a week in one job and earn £50,000, and have a second job paying £30,000, your tax code could be 1000L for the first job and D0 for the second job because the £30,000 earnings will be taxed entirely at the higher rate of 40%.

It's important to ensure the Revenue knows which is your MAIN job (generally the one that pays you most) as if it's the wrong way round it can cause problems.

Your PAYE Coding Notice (also known as a P2) should tell you what each tax code is for each job and how it was worked out. If it's unclear, call HMRC to get some answers.

How to use the calculator with multiple jobs

  • Put each code in the calculator separately, ideally starting with your main job, ie, the one that pays you the most
  • Your overall personal allowance is the sum of allowances from all the tax codes you have. For example, if you had tax codes 300L and 250L, then the tax-free allowance given to you by your tax codes is £5,500
  • Note down all the personal allowances given to you by your tax codes, and add them up. If these aren't equal to the allowance that your age and salary predict for you (the calculator lists this), then it's worth taking things further

If you have just left education and are going in to your first job, you should be put on the tax code that reflects your earnings and position. For example, if you qualify for a basic personal allowance of £10,000, you should be put on the standard tax code of 1000L.

However, a code of BR (with no numbers) may also be used if you've started a new job, don't have a form P45 and haven't completed a form P46 before your first pay day.

Sometimes it can take a month or so for HMRC to get you into its system and on the right tax code. But, so long as your P46 has been completed and filed - and this is down to whether your last employer acted properly - any tax you have overpaid will come back to you automatically in your next wage packet. If not, you should chase up after the tax year.

I have taken several years off work to start a family

If you took time out from your job to have a family and are bracing yourself to get back on the working wheel, you should automatically be put on the tax code that reflects your earnings and position. For example, if you qualify for a basic personal allowance of £10,000 you should be put on the standard tax code of 1000L.

However, a code of BR (with no numbers) may also be used if you've started a new job and haven't completed a form P46 before your first pay day. Even if you can lay your hands on it, your P45 won't be any good to you now as it is only valid for the current tax year.

Though if you present a new employer a P45, they will operate on the assumption that the tax code shown on it is correct, unless told otherwise.

I have not been living in the UK

If you have been working overseas and paying tax to a different country, you should be put on the tax code that reflects your new earnings and position as soon as you return to the UK and start working again. For example, if you qualify for a basic personal allowance of £10,000 in 2014/15, you should be put on the standard tax code of 1000L in 2014/15.

However, a straightforward code of BR (with no numbers) may also be used if you've started a new job, do not have a P45 form (which should have been given to you by your last employer) and haven't completed a P46 before your first pay day.

However, if there are still tax issues hanging over from the country you had previously been working in, you may find you are put on a T code, which indicates that your tax position is not settled and will need to be reviewed regularly by HMRC.

I have employee benefits, ie, private health care or a company car

This is where things can get complicated. The letter after your numbers - which will be your total personal allowance with the last digit removed - could be either an L or a T.

Which depends on the value of the taxable benefits, such as company car, dental care, private health care, mobile phone, vouchers or laptop.

If you're a higher rate payer (earning more than £31,865 above your personal allowance) or an additional rate tax payer (earning over £150,000) and have the perks to match, you are likely to be on the T code, denoting slightly tricky affairs.

I am receiving tax credits or child benefit

Claiming either of these WON'T make any difference to your tax code.

Working tax credits are classified as a 'means-tested benefit so this is not deducted from your individual personal allowance. However, while it's not part of your tax situation, if your circumstances change and you earn a higher salary for example, you will need to inform the Tax Credits office and this may affect your entitlement. See the full Tax Credits guide.

Child benefit was withdrawn from some higher earners from January 2013, with people earning between £50,000 and £60,000 a year only remaining eligible for a portion of it, and those earning £60,000 or above not eligible at all.

If this is you, you can still claim the child benefit, though it must be repaid at the end of the year. You can also choose to pay through your tax code, which will lower your personal allowance. You'll also have to fill in a self-assessment tax form.

If you were born between 6 April 1938 and 5 April 1948 you get a bigger personal allowance. If you are eligible for the full amount of age-related personal allowance (of £10,500 for this age bracket in 2014/15), the letter P should be tagged at the end of the numbers in your tax code - for example, 1050P.

If you were born before 6 April 1938 and are eligible for the full personal allowance (of £10,660 for this age bracket in 2014/15), the letter Y should be tagged at the end of the numbers in your tax code - for example, 1060Y.

Remember, you will only be eligible for these boosted personal allowances if you have total income of less than £27,000 in each tax year - above that, your personal allowance is reduced as you earn more (see the Income Tax Calculator).

Income from state pensions will also be subtracted from your personal allowance. If your total taxable deductions exceed the personal allowance available you will have a negative coding - where a K is used.

Make sure you fill out a P161 (pension enquiry form) which will be sent to you by HMRC as you approach retirement age. This will help to ensure you are put onto the right tax code from the outset.

IMPORTANT!

The Tax Code Calculator requires JavaScript to be enabled in your internet browser, otherwise it won't work. JavaScript is either disabled or not supported by your browser.

To get the Tax Code Calculator working properly, enable JavaScript by changing your browser options, then try again.

  • Internet Explorer 7. Go to the Tools menu, then click Internet Options. In the window that pops up, select the Security tab along the top. You will see a box titled Security level for this zone. To enable Javascript, make sure the sliding bar is set to either 'Medium' or 'Medium/High'
  • Mozilla Firefox. Go to the Tools menu, then click Options. In the window that pops up, select the Content tab along the top. Make sure the box next to 'Enable Javascript' is checked

Once you've changed this, please refresh this page to try again

The Tax Code Calculator

Once you've found your tax code (see above for how-to), enter it to find out whether it seems to fit you, or reasons why it may not

Tax Code


For Tax Year


For Age


For earnings
(pre-tax)

£ 

Important - please read

This is just a ready reckoner to steer you as to whether you may be on the wrong code. Only regard it as an estimate, and ensure you back it up with your own research and contact with the Tax Office. We cannot accept responsibility for action taken on the back of this calculator.

 

Vote in our poll:
Tax Code Checker: How much did you get?

If you have used the tax code checker and successfully received a rebate, please take a quick click to let us know how much you got

£1 - 500
£501 - £1,500
£1,501+

View current poll results Discuss tax rebate successes

Step 3: If you think your tax code's wrong

Now you understand what your tax code means, you will be able to assess whether it's likely to be correct for your earnings, age and situation. If your tax code doesn't look right, it probably isn't.

In either case, don't panic.

If you have overpaid tax, the money will come back to you. And if you have underpaid, not only do debtors' prisons no longer exist, but you won't have to pay it back all in one go.

  • If you are paying too much, you have not lost the cash - you can claim it back.
  • If you are not paying enough, you have not won - you will likely be hit with a nasty surprise bill later down the line.

The onus is on you to get on the right tax code! We now have two possible scenarios, and one is much more fun than the other!

I've overpaid - how do I get my cash back?

If your tax code is wrong...

The first thing to do is get in touch with HMRC; tell them you think your tax code may be wrong and why.

Find out more on how to contact HMRC.

Overpaid?Once HMRC has agreed that you have overpaid tax it will only ever inform you of a refund by post. This is a crucial point to remember following a spate of clever scams, so never discuss this with anyone over the phone, or via email - read the full MSE News story: Tax Chaos

Therefore usually it simply means identifying the overpayment with the revenue is the key way to get the cash back

How and when will I be repaid?

This depends on the tax year your claim refers to. If it is the current tax year and you are paying too much tax as a result of your tax code right now, HMRC will inform your employer, the tax code will be amended and the overdue tax will be refunded to you via your wages.

If the tax refund refers to previous tax years, you will be sent a refund by cheque in the post. You can opt to be repaid by BACS transfer but in this case you will need to supply your bank details by letter as, for security reasons HMRC will not accept bank details over the phone.

In some cases, HMRC will pay a paltry rate of interest on any tax you have overpaid - since September 2009, you earn 0.5% on overpaid tax (the year before it was 0%).

How far back can I claim?

You can claim back up to four years overpaid tax, if the problem's been going on that long. Here are all the time limits for claiming a refund:

Tax year (ends 5 April)

Deadline for claiming

2010-11

5 April 2015

2011-12

5 April 2016

2012-13

5 April 2017

2013-14

5 April 2018

However, even if the deadline has passed for the tax year in question, don't let this put you off getting back what's yours. In certain circumstances - including when HMRC is at fault - your claim will be considered. So fight your corner.

I've underpaid - what happens now?

Underpaid?In most cases you'll have to pay it back - and unlike when you have overpaid there is NO limit on how far back the taxman can go back, though this current reconciliation is dealing with the last three years.

How this works depends on the amounts involved and how HMRC has dealt with your case.

But it wasn't my fault I am on the wrong code!

That doesn't matter. We may have done away with the stocks these days, but the state wants its cash as much as ever. This means that even if you are on the wrong tax code through no fault of your own, the same procedures will apply.

The official line from HMRC is that it is each individual's responsibility to you check they are on the right tax code, so mistakes made by former employers are technically your problem.

However in light of the recent massive publicity over the huge number of people who have been in the wrong code, some limited concessions have been made, such as writing off underpayments of under £50 for underpayments in the last year (see below).

Is the underpayment more than a year old?

The one potential hope to challenge goes by the not-so-catchy name of an Extra Statutory Concession - or an A19 (read about this on HMRC website). However, HMRC is looking to make it much harder to claim using the A19 concession - more below

It's a little-known clause that lurks deep in HMRC's complex book of rules stating that..

If the taxman failed to inform you of underpayment within 12 months of the tax year's end, your debt COULD be written off.

This ISN'T guaranteed, and in fact it's far from likely it will work. But there is a possibility, so it may be worth giving it a go.

To even think about going down this route, you must strictly fulfil the following criteria:

  • The overpayment is more than 12 months old.
  • HMRC was given the CORRECT information (which is purely on the onus of you and your employer but if you're one of the 'mistake' cases that's likely).
  • Lastly, you will need to genuinely demonstrate a 'reasonable belief' that your tax affairs were in order which can become pretty tricky - if you suddenly started receiving loads more pay, it can be argued you should have spotted it!

This means that at present, if you underpaid in the 2012/13 tax year or earlier you may be able to go the A19 route.

You will also need to have all your paperwork and dates in perfect order.

However, if you feel as though injustice has been done and, as a result, you can overcome these hurdles and apply for exemption under an A19 simply by calling the HMRC.


With thanks to the Low Income Tax Reform Group

It emerged in March 2012 that around a quarter of appeals using the A19 route had been successful since September 2010, showing it is definitely worth a go if you qualify - read MSE News: A19 success. We have also received emails telling us of successes - one reader had a £1,700 repayment written off after HMRC didn't follow procedures properly.

Thumbs up

"I am delighted to tell you that my underpayment (£1,700) has been written off under the A19 ruling. The underpayment HMRC had already started deducting from my pension has been refunded."

Changes to the A19 concession

HM Revenue & Customs proposes to change the A19 concession to make it harder to claim. The main change will be a change in emphasis, making you (not it) responsible for checking your tax code to make sure it's correct - if you've not done this, your appeal won't be upheld.

Reports from tax advisers using the A19 concession for clients tell that claims which would have been approved by HMRC in previous years are being rejected - mainly on the "reasonable belief" criterion - did the taxpayer check their coding notice, and that it was a true reflection of their circumstances?

It's doubly important now to make sure any claim is watertight, and also to go in with little hope of a good outcome - the previous 1 in 4 success rate is unlikely to be achieved now - especially if you can't prove that you checked your tax code when sent it, and notified HMRC of any errors at that point.

In any case, ESC A19 may have a limited shelf life. HMRC reconciles all cases of complicated tax affairs at the end of every tax year - meaning that it's very unlikely that more than a handful of cases will receive notification of underpaid tax more than a year old.

It doesn't stop there - if you wash or repair a
work uniform yourself, you may be able to reclaim £100s.
See Work Uniform Tax Rebates guide.

Step 4: Keep an eye on your future codes

With any luck, once you have established the right tax code, it'll all be sorted with HMRC from then on - unravelling the web of complexity surrounding tax codes and what you ultimately should be paying. Yet don't bank on it...

Small changes can change your code

Every time your circumstances change - whether it's a promotion at work with a larger salary or added benefits, taking on another job, giving up work to have children or leaving the country and the UK tax system behind altogether, your tax code may change, so it can be worth getting onto HMRC to establish your new tax code.

A phone call today (even an expensive one) can save an awful lot of hassle and expense in the future...

Don't miss out on updates to this guide Get MoneySavingExpert's free, spam-free weekly email full of guides & loopholes

Get free tax help

This guide is to give you general information about tax codes to help see if you're on the right track. Yet it's no substitute for personal advice if you need it - and you should always take care to ensure you're definite about any actions you're taking.

The following organisations all give help and advice and some don't charge a fee, so give them a try if you are struggling:

tax aid

Tax Aid:

Send your enquiry via www.taxaid.org.uk

citizens' adviceCitizen's Advice Bureau:

Visit www.citizensadvice.org.uk to get the number of your local Citizen's Advice Bureau

LITRG

Low Income Tax Reform Group:

This is an initiative from the Chartered Institute of Taxation, aimed at those with low incomes who have tax problems. Visit www.litrg.org.uk

T.O.P

Tax Help for Older People:

Visit www.taxvol.org.uk or call 01308 488066

tax instituteFind a tax adviser:

If you can afford it and have more complex affairs. You can use the Chartered Institute of Taxation's 'Find a Tax Adviser' search.

Leave feedback on this guide:

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