What should I do if I am on the wrong tax code?
Understanding Tax Codes, P60s, and Payroll Reporting
In employment, the amount of income tax is determined by the two documents.
P-60
P11, if it applies
By the 31st of May each year, every employer has a statutory obligation* to issue employees with a P-60, a document detailing salary, tax, and National Insurance contributions for the tax year that just ended. For example, the 31st of May 2026 is the deadline to produce the P-60 for the 2025-2026 tax year. Those details serve as the basis for mortgage and loan applications, tax rebates, and Self-Assessment when there is multiple income to report.
By the 6th of June each year, employers have to provide the HMRC with a P11D for the tax year that has just ended, reporting on employees’ and company directors’ benefits in kind and taxable expenses
The reported income from benefits (accommodation, company car, gym membership, health insurance, etc.) may affect the tax code, usually reducing the tax-free allowance.
Those changes may result in a new Tax Code.
The obligation to submit the P11 falls on bookkeepers and Payroll professionals. Communication barriers create gaps in information about benefits and expenses that are factored into tax codes, leading to incorrect codes for the new tax year. For these reasons, the P-11 form is being phased out as more constructive solutions are considered.
If you think that some of your benefits in kind were omitted from the P-11 form, get in touch with your company's payroll department, which can still act on your behalf.
There are, however, many more voices disputing the tax overpayment due to 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, unnecessarily reducing your monthly income. 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
You can request a tax refund by post if you overpaid as an employee or self-employed by filing out a form R-38
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 bookkeeping team today to ensure your finances are in order and you’re not overpaying on tax.
*The person to whom the P-60 is issued must an employee and employed and under the Contract of engagements, and the employee must have been employed on the last day of the previous tax year (2025/2026) and the employer must have obligation to deduct income tax So if employed started working on the 1st of April last year there would be no statutory obligation to produce P-60 because the employee won't pay income tax until 31st of April.
** P-45 Document issued by the employer to the employee upon leaving a job, detailing the taxable earnings and tax paid for the tax year. It is required to provide the new employer at the time of job change to ensure the new employee is on the correct tax code.
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