Are you on the right tax code?
Many people end up paying too much or too little tax by being on the wrong tax code. It’s therefore important that you check you are on the right tax code. This would eliminate the pressure in case you underpaid your tax and you are sent a tax bill that you didn’t expect.
Where to check for your tax code:
- Payslips – You receive from your employer every time you get paid
- Notice of coding received from HMRC
- P60 – You normally get this at the end of the financial year
- P45 – This is given to you when you leave a job
If you have more than one job, decide which your main one is so that it’s used to calculate your tax code and personal allowance. Your other second job would normally have a different tax code and HMRC would automatically apply your left over personal allowance if there is any to your second job. In many cases you will pay tax at basic rate (20%) on all your earnings of a second job. If you have more than one job you need to check that you are not getting too much in allowances across all your jobs.
Your tax code is used by your employer to calculate the amount of tax to deduct from your wages but the tax code is worked out by HMRC who sends it to your employer.
When you leave a job always get your P45 so that your new employer uses the right tax code otherwise you could end up on emergency code.
1060L is the tax code being used for 2015/2016 financial year for those born after 5 April 1938 with one job. Your tax code will change each financial year usually due to an increase in personal allowance.
However your tax code could change if you start or stop getting the following:
- Benefits from your employer that you need to pay tax on like a company car, healthcare insurance etc..
- Expenses from work that you can reclaim tax for
- Income that isn’t being taxed like rental
- State benefits that you need to pay tax on like state pension
There are also other small changes that could change your tax code like a promotion at work with a bigger salary, new employee benefit, taking on another job etc.
What to do if your tax code is wrong
Inform HMRC if you think your tax code is wrong and they will adjust your tax code so that you pay the right tax and get the personal allowance you are entitled to.
Your employer has nothing to do with tax codes so you will be wasting your time phoning up your payroll department as they won’t be of any help.
A phonecall to HMRC today can relieve you pressure for tomorrow! .
The number to call is 03002003300