Paying too much tax? Here’s what to do next

Not sure if you’re paying too much tax?

No matter what stage of your career you’re in or where you work, paying the right amount on your tax contributions isn’t always straightforward. Especially if you’re not sure what rate you’re supposed to be paying.

To clear up the confusion, here’s our advice to help make sure you get your tax right:

 

How much should I be paying?

How much tax you pay is based on your current earnings, as well as the amount you’ve contributed during the year, and your own Personal Allowance.

To make sure you pay the right amount, HMRC allocates everyone an individual tax code. This may change when you change employment.

The easiest way to check your contributions are correct is by using our Tax Calculator. You can also read more about Tax and National Insurance deductions through the Money Advice Service.

Tax codes explained

 

How do I check my tax code?

You’ll be able to view which tax code you’re on by looking at a recent wage slip.

Alternatively, you’ll be able to check this on your P60.

If you have more than one job, you may have multiple tax codes. When looking to calculate your overall amount, make sure you check these separately.

 Second job tax – how much will I have to pay?

 

Why might my tax code be wrong?

There are some instances where an individual may be issued with the wrong tax code. Possible reasons could include:

  • If you’ve recently changed jobs
  • If you’ve recently started a second job
  • If your state benefits have changed
  • If you company benefits have changed
  • If you are receiving additional income that isn’t taxed, such as rental income

 

What should I do if I think I’m paying the wrong amount of tax?

If you’ve checked your tax code against your Personal Allowance and think that it may be wrong, you should contact HMRC directly to confirm. You could also contact your tax office to ask for an assessment.

If you think you’ve overpaid in previous years, you may need to provide P60s for the relevant years. In this instance, making copies of these documents would be recommended, to ensure that you’re protected against loss.

 

How do I claim a tax refund?

Once you’ve contacted HMRC or your local tax office, they’ll be able to decide whether a refund is due or not.

If you’re entitled to a rebate, you will be provided with the relevant process to claim your money back. Depending on your circumstances you may have to complete a form in order to complete your refund, you might be able to claim online, or they may be able to issue it directly.

Alternatively, you might be asked to provide some additional information in order to verify their assessment. This could include your P60, or a recent wage slip.

N.B. There are many third party sites and services out there which may offer to help you claim a rebate. However, you should never be charged for this service, and you should always go directly to HMRC in order to claim.

Claim a tax refund

 

How long will it take to claim a tax refund?

Once your enquiry has been processed, you may be issued with a new tax code by HMRC. If this is the case, your refund will be added to your salary (if you’re currently in employment).

Your repayment will usually be sent within 5 weeks, although there are some circumstances where it may take longer.

You should contact HMRC directly if you need a refund sooner.

When you’ll get your refund

 

What happens if I’m paying too little tax?

Unfortunately, it is possible that you might not be paying enough tax.

If you think this might be the case, you should contact HMRC directly, or your local tax office to confirm.

Always aim to do this as soon as possible. The amount you have to pay back will only increase over time, and can be claimed back for up to four years – even if the error is not your fault.

 

Still think you’re paying too much tax? Find out now with our Tax Calculator, or contact HMRC now.

 

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