Martin Lewis warning over ‘big’ tax issue that ‘every employee’ should check | Personal Finance | Finance
Martin Lewis has issued a call for people to check that their tax details are correct. You could pay the wrong amount of tax if your details are not all up to date.
On his BBC podcast, Mr Lewis was asked for his thoughts on tax bands by an NHS worker. During his answer, he shared a word of warning that applies to millions of people.
The consumer expert said: “The one big thing that we do need to be careful of, and which everyone who is an employee needs to be careful of is, is your tax code correct.”
He explained how these codes work: “You’ll get a tax code, normally it will be four numbers and a letter. So the standard one is 1257L. What that means is add a zero, to the number, so 1257 becomes 12,570, that is telling you what your tax-free personal allowance is, the amount you can earn before tax.”
Each person gets a standard personal allowance of £12,570 a year, meaning you can earn up to this amount each year without paying income tax. Mr Lewis went on to point out some of the complexities here.
He said: “It (your tax code) can change and vary depending on what employment perks you get. The letter is far more complicated. L is the simple one.”
The letter ‘L’ at the end of your code means you are entitled to the full personal allowance. Mr Lewis said help is available to understand your tax code.
He said: “There are tax code calculators online that can decipher your tax code for you, and then hopefully help you work out whether you’re roughly in the right tax code or not. That is worth checking, especially if you’ve got a second job. That’s where the mistakes can happen.”
You can find your tax code on your payslip as well as through the HMRC app, or in your personal tax account on the Government website.
It is your personal responsibility to ensure your tax code is correct, rather than your employer. If your tax code is incorrect, you may need to update your details with HMRC to get this sorted out.
You can request this through your personal tax account. You can also call up HMRC for help on 0300 200 3300. Lines are open Monday to Friday from 8am to 6pm.
