Employees are being urged to check their P60 and see if they are owed thousands. One missing letter in your tax code could see you massively overtaxed.
A P60 shows the amount of tax you’ve paid on your salary in the previous tax year (6 April 2024 to 5 April 2025). If the final tax code is wrong, it won’t correct itself automatically.
The warning comes as millions of Brits are believed to be on the wrong tax code, and the average tax refund is around £1,500. Employees need to claim back refunds as they aren’t issued automatically.
Jo Adams, Finance Director at hybrid working experts Work.Life, has shared what employees must look out for: "Tax codes are used to tell your employer or pension provider to withhold the right amount of tax from your wages and pensions when you get paid.
"If you're a full-time employee, your payslip will likely have the tax code 1257L. The numbers in your tax code indicate how much tax-free income you get in that tax year. The ‘L’ means you’re entitled to the standard tax-free Personal Allowance of £12,570. This is the most common tax code for people who have one job or pension."
Which mistakes could lead to a wrong tax code?
Starting a new job without providing your P45
When you leave employment, you will be given a P45. This form shows how much tax you’ve paid on your salary so far in the tax year (6 April to 5 April).
The form includes important information for your new employer, which enables them to work out how much tax you should be paying for the rest of the tax year.
If you do not provide a P45, you might be put on an emergency or temporary tax code (like 1257L W1 or M1). This means tax is calculated without your full allowance history, often causing overpayment until corrected.
Having more than one job or pension
If you have multiple income sources, each type of income gets assigned a separate tax code. However, the personal allowance can only be used once, and HMRC expects you to use it on your main job or pension.
If you don’t tell HMRC about your additional income, they may tax it at the basic rate (BR) or higher rate (D0, D1), leading to large deductions.
They may also assign your personal allowance to the wrong type of income, leading to confusion and over-taxation.
This can be avoided by letting HMRC know as soon as you take up additional employment. You can also split up your tax-free allowance over multiple incomes to avoid paying tax at a much higher rate on your second job.
Not registering for self-assessment when required
Most full-time employees have tax automatically deducted by their employers via PAYE and are therefore not required to submit a tax return, also called self-assessment.
However, it’s a common misconception that full-time workers don’t ever need to submit tax returns at all. If you receive additional untaxed income from rent, dividends and freelancing, for example, you may also need to file a self-assessment and pay the tax due.
If you don’t, HMRC may adjust your tax code and reduce your personal allowance to collect the estimated tax using K codes instead.
You could also be liable to fines if you don’t file the required forms, so it’s worth checking the self-assessment government website or consulting with a financial adviser if you think you have exceeded the thresholds for the current tax year.
Think you’re owed a tax refund?
— HM Revenue & Customs (@HMRCgovuk) June 11, 2025
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“It is vital that employers and employees keep track of tax codes to ensure the right amount of tax is being paid throughout the year," says Jo.
“Doing this will prevent any issues regarding underpayment, which could lead to a surprise bill or tax code adjustment to collect the missing amount.
“If employees think their tax code could be wrong, they should contact HMRC and their employer as soon as possible to avoid continuing to overpay. They may also be eligible for a refund.
“There isn’t a lot of time to claim a tax refund. Any claims must be made within 4 years after the end of the relevant tax year.”
How to check your tax code your tax code
You can find your tax code:
- by checking your tax code for the current year online - you’ll need to sign in to or create an online account on gov.uk
- on the HMRC app
- on your payslip
- on a ‘Tax Code Notice’ letter from HMRC, if you get one
This week's 'Joker' #martinlewis break bumper: If you have a 1250L tax code - what does the number bit stand for?a) Just an ID codeb) You can earn 10x that number tax free each yearc) It's your additional allowance on top of the standard allowance
— Martin Lewis (@MartinSLewis) February 17, 2020
If you check your tax code online or in the HMRC app, you can also:
- find your tax code for previous tax years
- sign up for paperless notifications - this means HMRC will email you when your tax code changes
Check what your tax code means
You can use the HMRC tax code checker to find out:
- what the numbers and letters in your tax code mean
- how much tax you will pay
- what you may need to do next
What the numbers mean in your HMRC tax code
The numbers in your tax code tell your employer or pension provider how much tax-free income you get in that tax year.
HMRC works out your individual number based on your Personal Allowance and income you have not paid tax on (such as untaxed interest or part-time earnings). They also consider the value of any perks you get from your employer (such as a company car).
@uktoday_ Here are the UK tax codes explained and how to check your tax code #uknews #uktax #taxcode #uknewsheadlines ♬ original sound - UKToday 🇬🇧 Newsquest
HMRC tax code letters and what they mean
The full list can be found on the GOV.UK website, but these are the most common, and what they mean:
- L - For an employee entitled to the standard tax-free Personal Allowance
- S - For an employee whose main home is in Scotland
- BR/ SBR - For a second job or pension
- M - For an employee whose spouse or civil partner has transferred some of their Personal Allowance (through Marriage Allowance)
- N - For an employee who has transferred some of their Personal Allowance to their spouse or civil partner (through Marriage Allowance)
- T - When HMRC needs to review some items with the employee
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How to claim back tax with an HMRC tax rebate
If you think you are on the wrong tax code, you can contact HMRC on 0300 200 330 or speak to an advisor online via their live chat service.
HMRC will contact your employer to correct your tax code and you will get any money you overpaid in tax in your next payslip.
You can also claim back up to four additional years if you have been overpaying for some time.
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