If you think you're on the wrong tax code, you don't have to wait until the end of the tax year to sort it out. You can check the information HMRC is using to calculate your code and update anything that's incorrect or missing.
This guide explains how to change an incorrect tax code, what information you'll need and what happens if you've already paid too much or too little tax.
Not sure what the numbers and letters mean? Read our Tax Codes Explained guide.
How Do I Know If My Tax Code Is Wrong?
If something doesn't look right on your payslip, it's worth checking whether HMRC has the correct information about your income and circumstances. Some signs that your tax code might need checking include:
- It has changed and you're not sure why.
- You've started a new job but your previous employment is still showing on HMRC's records.
- HMRC's estimate of your income is incorrect.
- Your tax code includes a company benefit you no longer receive.
- You've recently started or stopped receiving income from another job or pension.
- You've been placed on an emergency tax code.
- The tax code on your payslip is different from the one shown by HMRC.
You can check the tax code HMRC currently has for you using the Check your Income Tax service or the HMRC app, then compare it with the code on your latest payslip. If the two codes are different, HMRC advises contacting your employer to check they're using the correct one.
How to Change Your Tax Code
If you think your tax code is wrong, you don't choose a new code yourself. Instead, you'll need to check the information HMRC is using to calculate your tax code and correct anything that's wrong or missing. HMRC will then update your code if necessary.
Step 1: Check the Tax Code HMRC Has for You
Start by checking your current tax code using HMRC's Check your Income Tax online service or the HMRC app.
Compare this with the tax code shown on your latest payslip. If the code on your payslip is different from the one HMRC has for you, speak to your employer to check they're using the correct code.
If the codes match but you're unsure what yours means, read our Tax Codes Explained guide.
Step 2: Check the Information HMRC Is Using
If the code doesn't look right for your circumstances, check the information HMRC has used to calculate it.
This includes your:
- employment details
- pension details
- estimated taxable income
- company benefits
- employment expenses
An incorrect tax code is often caused by wrong or missing information, so identifying what's incorrect is an important part of getting the code changed.
Step 3: Update Anything That's Wrong or Missing
You can update many of these details through HMRC's Check your Income Tax online service.
For example, you can tell HMRC if an old employment is still showing, update your estimated income or correct information about your company benefits. You can also claim tax relief for eligible employment expenses.
If you've left a job and didn't receive a P45, ask your previous employer for one. This can help HMRC update your employment and income details.
Once you've made the necessary changes, HMRC will use the updated information to determine whether your tax code needs to change.
Step 4: Contact HMRC If You Can't Change It Online
If you can't use HMRC's online service, you can contact HMRC directly about your Income Tax and tax code.
If you've recently started a new job, HMRC advises waiting 35 days before contacting them about an incorrect code, as it can take time for your employment details to reach them. You can find more information about resolving this in the emergency-tax section below.
Can My Employer Change My Tax Code?
Your employer doesn't normally decide what your tax code should be. HMRC provides the tax code and your employer uses it to calculate how much Income Tax to deduct from your pay.
If the tax code on your payslip is different from the one HMRC currently has for you, speak to your employer. They can check whether they've received your updated code and applied it to their payroll.
What Happens After You Change Your Tax Code?
If HMRC decides your tax code needs to change, it will update the code and tell both you and your employer within 15 working days.
If your new tax code doesn't appear by then, speak to your employer to check they've received it from HMRC.
What If I've Paid Too Much Tax Because My Tax Code Was Wrong?
If you've been on the wrong tax code, you may have paid more Income Tax than you actually owed. What happens next depends partly on whether the mistake is corrected during the tax year or identified afterwards.
If Your Tax Code Is Corrected During the Tax Year
When HMRC updates your tax code, it will check whether it has all the income information it needs for the tax year.
If it does, HMRC will calculate the difference between the tax you've paid and the amount you should have paid. Your employer or pension provider will then normally refund the difference through your pay when they start using your new tax code.
If HMRC doesn't yet have all your income details, you'll need to wait until it receives them before a refund can be calculated.
If the Tax Year Has Already Ended
After the end of the tax year, HMRC checks the information it receives from employers and pension providers to see whether you've paid the correct amount of tax.
If you've paid too much or too little, HMRC may send you a P800 tax calculation. This will show how your tax has been calculated and whether you're due a refund.
If you're owed money, your P800 will tell you how to receive your refund. Depending on the instructions in your letter, you may be able to claim it online, through your Personal Tax Account or HMRC app, or by contacting HMRC. In some cases, HMRC will send a cheque automatically.
What If I've Paid Too Little Tax?
Being on the wrong tax code can also mean you haven't paid enough Income Tax.
If HMRC identifies an underpayment while updating your tax code, it will estimate how much you owe and may adjust your code to collect the outstanding tax over one or more tax years. HMRC will then check the final amount after the end of the tax year.
If you receive a P800 showing an underpayment of less than £3,000, HMRC will usually collect it automatically through your tax code where you're eligible. This normally means the amount is deducted in instalments from your salary or pension during the following tax year.
If HMRC can't collect the amount through your tax code, it will write to you explaining how the outstanding tax should be paid.
What If I'm on an Emergency Tax Code?
If you've recently started a new job and your employer doesn't have your previous income and tax details, you may temporarily be put on an emergency tax code. This can mean you pay more or less tax than you should until HMRC has the information it needs.
Emergency tax codes can also be used when you start receiving certain company benefits or the State Pension. In these cases, check that HMRC has the correct information about your income and benefits, as the emergency code may remain in place until the end of the tax year.
If you have a P45 from your previous job, give it to your new employer. If you don't have a P45 and haven't yet been paid, your employer should ask you to complete a starter checklist instead.
HMRC will usually update your tax code once it receives the necessary information from your employers. This can take up to 35 days from starting your new job.
If you've been in the job for more than 35 days and still think your tax code is wrong, check your details using HMRC's Check your Income Tax service and update anything that's incorrect or missing.
Can an Accountant Help Change My Tax Code?
You can deal with an incorrect tax code yourself, but there are circumstances where speaking to an accountant can be useful.
For example, you may want help if:
- you don't understand why HMRC has changed your code
- you receive income from several different sources
- taxable benefits or employment expenses are affecting your code
- HMRC's income figures don't match your records
- you've overpaid or underpaid tax and aren't sure why
You can also authorise an accountant or tax adviser to deal with HMRC on your behalf. Once appropriately authorised, an agent can contact HMRC about PAYE matters for their client, including tax-code queries.
Get Help With an Incorrect Tax Code
If you're unsure why your tax code has changed or HMRC's records don't match your circumstances, Ryans can help you review your tax position, identify what needs correcting and deal with HMRC on your behalf where appropriate.
Get in touch with our team for help with your tax position.