What should I do if I am on the wrong tax code?
If you’re on the wrong tax code while on PAYE (Pay As You Earn), it can lead to you paying too much or too little income tax. This is a common issue that can affect employees, freelancers, pensioners, and even self-employed individuals with multiple income streams.
Why Might You Be on the Wrong Tax Code?
The most common incorrect tax code is the emergency tax code (often denoted with “E”). This often results in you being taxed at a higher rate, reducing your monthly income unnecessarily. A tax code error can occur for several reasons:
Your payroll officer didn’t receive complete information from HMRC.
You changed jobs and didn’t provide your P45.
You have multiple sources of income (e.g., part-time jobs, pensions, or self-employment).
You’re a student or seasonal worker with irregular hours.
You’ve recently retired or started receiving a pension, affecting your personal allowance.
Inaccurate tax codes are a common issue we encounter when providing bookkeeping services for individuals and small businesses. Understanding your tax code is vital to managing your personal finances and preventing tax overpayment.
What to Do If You’re on the Wrong Tax Code
If you suspect a tax code mistake, contact HMRC immediately to resolve the issue. Ignoring it could lead to long-term financial consequences.
The best course of action is to call the HMRC helpline for individuals and employees:
📞 0300 200 3300
In addition, HMRC sends out a P800 form (End of Year Tax Calculation) if you have overpaid or underpaid tax. If you realise the issue before the tax year ends, you don’t have to wait—you can request a tax refund by:
Calling the number above
Logging into your HMRC online account (you’ll need to register if you haven’t already)
Depending on the situation, you may receive:
A cash refund
An adjustment to your tax code to reflect accurate income and tax
How Bookkeeping Services Can Help
At our bookkeeping practice, we frequently help clients spot and correct tax code errors. Whether you're an employee, self-employed, or managing small business payroll, we can assist with:
Reviewing your payslips and tax code
Liaising with HMRC on your behalf
Ensuring you receive any income tax refund you’re entitled to
Need help reviewing your tax code or claiming a tax refund?
Get in touch with our expert bookkeeping team today to ensure your finances are in order and you’re not overpaying on tax.
