Millions of workers could end up paying the wrong amount of tax if their tax code is not correct. Martin Lewis has warned that mistakes can happen, particularly for people with more than one job. Tax codes determine how much income can be earned before tax is applied. Speaking on his BBC podcast, Lewis said employees should make sure the information held by HMRC reflects their circumstances.
The warning came in response to a question from an NHS worker about tax bands. During his answer, Lewis highlighted what he described as a major issue that affects employees across the UK.
According to Martin Lewis, checking a tax code is one of the most important steps workers can take to ensure they are paying the correct amount of tax. He noted that tax codes can change depending on individual circumstances and employment arrangements.
Why Tax Codes Matter for Employees
Tax codes are used by HMRC and employers to calculate how much income tax should be deducted from wages. Lewis explained that the standard tax code for many people is 1257L.
According to Lewis, the numerical part of the code can be understood by adding a zero to the end of the figure. In the case of 1257L, this corresponds to £12,570, which represents the standard tax-free personal allowance. This is the amount most people can earn each year before income tax becomes payable.
Lewis also pointed out that the letters attached to tax codes carry additional meaning. He said the letter “L” is the simplest example and indicates that an individual is entitled to the full personal allowance.
Not every employee will have the same code, though. Lewis explained that tax codes can vary depending on factors such as employment benefits and other aspects of a person’s financial situation. As a result, workers may find that their code differs from the standard version.
The consumer finance expert added that online tax code calculators are available to help people understand what their code means and assess whether it appears broadly correct.
Where Mistakes Can Occur and How to Check Your Details
Lewis warned that errors can occur, particularly for people who have a second job. According to his comments on the BBC podcast, this is one of the situations in which tax code mistakes are more likely to happen.
An incorrect tax code can result in a worker paying too much or too little tax. For that reason, Lewis encouraged employees to review their details and make sure the information used by HMRC is accurate.
Workers can find their tax code in several places. According to reports, it is displayed on payslips and can also be accessed through the HMRC app. It is available as well through an individual’s personal tax account on the Government website.
The report notes that responsibility for ensuring a tax code is correct rests with the individual rather than the employer. If a person discovers that their code is wrong, they may need to update their details with HMRC.
Changes can be requested through a personal tax account. HMRC can also be contacted directly for assistance on 0300 200 3300, with telephone lines operating from 8am to 6pm, Monday to Friday. Lewis’s message was straightforward: employees should check their tax code and make sure it accurately reflects their circumstances, especially if they have more than one source of employment.
