Martin Lewis expert warns Brits as millions have the wrong tax code | Personal Finance | Finance
Martin Lewis returned to The Martin Lewis Podcast on Monday with tax guru Rebecca Benneyworth to discuss listeners’ big tax questions. One fan wrote into the BBC show saying: “I have two jobs, one main job and one agency, yet I have the same tax code 1269L: why?”
In a short and sweet reply, Rebecca blatantly declared: “Because they’re wrong…The fact they’re both the same tells me they’re wrong,” as Martin noted that “millions” of people have the wrong tax code.
She explained: “If at your main job you’re earning more than £12,570, then you’ve got no allowances left for the other job so you’ll have a different tax code.”
Rebecca advised that the caller, Stephen, get this issue solved as soon as possible, warning him that he’s currently “seriously underpaying tax” and that it would “come home to roost”.
There are multiple ways a tax code can be mistaken through errors by the HMRC, a person’s employer or the employee themselves.
Rebecca explained the likely situation in Stephen’s case was an issue between him or the agency: “When you get your agency job you will have a been given a starter form and can tick a box on what your circumstances are.
“One of the boxes will say ‘this is my main job’ or ‘this is my only job’ and that helps HMRC get your tax code right. When the payroll gets filed to HMRC they’ll send the tax code back to your employer.
“You really do need to sort it out,” she added with a touch of concern in her voice.
The “tax deity” Rebecca noted that most people’s tax code will be 1257L. This details the allowance of income they receive tax-free each tax year.
The figure of £12,570 is the basic personal allowance provided to everyone, and Rebecca explained: “How they get the tax code is just chop the last number off, nothing scientific about it.”
She highlighted that some people may have “bigger tax codes”, any numbers over 1257, which means they are receiving more tax-free allowance.
This could be from pension contributions relief or things like claiming back for laundering a work uniform.
Those that have a tax code less than 1257 may find they’re paying off a previous tax bill which is eating into their tax-free allowance.