HMRC is sending payments of up to £689 to UK households as millions of workers and pensioners are affected by incorrect tax codes. Martin Lewis, founder of Money Saving Expert, has issued an urgent reminder for everyone in employment or receiving a pension to check their tax code.
Martin Lewis Warns of Widespread Errors
The 52-year-old BBC and ITV star said: 'Millions of codes are wrong each year, so it's crucial to check yours — it's your responsibility, not your employer's, not HMRC's.' On his BBC Sounds podcast, he added: 'Do not assume that because it's coming from HMRC that it is right. Millions — and that is not an exaggeration, it's a literal fact — millions are wrong every year.'
Overpayments Totalling £3.5 Billion
According to a Freedom of Information request by accountancy firm UHY Hacker Young, 5.6 million people overpaid a combined £3.5 billion in income tax in the most recent tax year, with the average overpayment standing at around £689.
Stefani Williams, Partner at financial advisers Holden & Partners, explained: 'Tax codes can change after events such as a job move, starting to draw a pension, or receiving workplace benefits. It's something that's easy to overlook. The common theme is that these things don't usually correct themselves automatically. Taking a little time to review your position can make a difference.'
Expert Advice on Checking Tax Codes
John Chew, tax and estate planning specialist at Canada Life, said: 'Understanding your tax code is vital to ensure you’re paying the right amount of income tax. Those who are not on the right code may find themselves out of pocket. If it’s wrong, you may end up contributing more or less than you’re supposed to. So, if you haven’t checked your tax code(s) recently, now is a good time.'
He added: 'Remember, there are time limits to reclaim overpaid income tax, which is four years from the end of the tax year in which you are trying to claim so if you are in any doubt, the earlier you contact HMRC, the better.'
Canada Life's survey found less than half of the 2,000 people questioned (42%) know their current tax code is correct.
