Free Tax Code Calculator

It indicates the first three or four digits of your tax-free allowance – the amount you can earn in a year before your employer needs to deduct tax. The size of this layer depends on your income and whether there are any deductions (eg, company car) or additions (eg, pension contributions) to this.

You need to add a zero on the end to get the real number, so 1185 means you can earn £11,850 a year tax free. Above that, you pay tax on income, though the amount you pay depends on your total earnings.

For the 2018/19 tax year (which runs from 6 April 2018 to 5 April 2019):

• You pay 20% tax... on the portion of your income that is between £1 and £34,500 above your personal allowance. This is called basic-rate tax.
• You pay 40% tax... on the portion of your income that is between £34,501 above your personal allowance and an overall salary of £150,000. This is called higher-rate tax.
• You pay 45% tax... on the portion of your income above £150,000. This is called additional-rate tax.

If you live in Scotland, tax rates are different. For the 2018/19 tax year:

• You pay 19% tax... on the portion of your income that is between £1 and £2,000 above your personal allowance. This is called starter-rate tax.
• You pay 20% tax... on the portion of your income that is between £2,001 and £12,150 above your personal allowance. This is called basic-rate tax.
• You pay 21% tax... on the portion of your income that is between £12,151 and £31,500 above your personal allowance. This is called intermediate-rate tax.
• You pay 41% tax... on the portion of your income that is between £31,501 above your personal allowance and an overall salary of £150,000. This is called higher-rate tax.
• You pay 46% tax... on the portion of your income above £150,000. This is called additional-rate tax.

This may relate to a number of different factors, and you should use the Tax Code Calculator to check that the definitions are relevant for you.

It usually refers to your age, at what rate that employment is being taxed, and whether you have any unusual circumstances. Here are a few examples:

• L – most common code – you're eligible for standard personal allowance.
• BR – whole income taxed at 20% – usually for second jobs/pensions.
• NT – no tax to be deducted from this income – often used if you live overseas.

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.

It's probably simplest to call HMRC so you can resolve your situation with a human and ask questions along the way. You can call it on 0300 200 3300 or you can fill in an online form on the HMRC website to let it know your tax code is wrong.

If HMRC agrees you've 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 email and phone scams, so never discuss this with anyone over the phone, or via email.

Therefore usually it simply means identifying the overpayment and informing HMRC is the key way to get any overpaid 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'll 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:

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.

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.

How you go about paying what you owe 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 debtor's prison, 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 as if it was your fault.

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 £50 or less in the last year.

Is the underpayment more than a year old? You may be able to reject it...

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 2015/16 tax year or earlier you may be able to go the A19 route (from 6 April 2018, you'll be able to claim for the 2016/17 tax year too).

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 or writing to HMRC.

This is definitely worth a go if you qualify, we've an A19 full how to, though remember it's far from a sure thing. But, we have received emails telling us of successes – one reader had a £1,700 repayment written off after HMRC didn't follow procedures properly.

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.

A19 doesn't apply to me, I have to repay. How do I do that?

If you do owe the tax HMRC claims you do, then you will have to repay it. But the good thing is that you don't have to repay it all at once. For smaller amounts, you can pay through your tax code over the next year. And for larger amounts, you can agree a repayment plan with HMRC. We've answered some common questions about tax underpayment here:

Quick questions