HMRC has clarified one of its tax rules, as you may pay a different amount of tax from what your records suggest. The matter came to light after a taxpayer contacted the authority. They were concerned they had paid the wrong amount of tax.
Writing on social media, the person said they were confused as they had been sent a tax rebate and then their tax code had been changed as “you [HMRC] predicted I won’t be paying enough tax for this year”. HMRC responded to ask if the refund they had received was for a previous tax year or the current one.
The person responded to say it related to a previous tax year. They expressed their confusing again, saying they “don’t understand how I can overpay/underpay”.
HMRC responded to explain what may have happened: “In general, something has happened during the tax year that wasn’t accounted for in the tax code.” The tax body added another thing to bear in mind when it comes to tax codes.
The group said: “Remember tax codes are based on a prediction of what taxable income you’ll get, so are only ever an estimate.” Your tax code determines how much tax is deducted from your employment earning or from your pension income.
You can find your current tax code on a recent payslip. You can also check what it is through your personal tax account on the Government website or in the HMRC app.
An advantage of checking through your tax account or in the HMRC app is you can also find out what your tax code was for previous tax years.
Through these systems, you can also sign up for paperless notifications, meaning HMRC will send you an email if your tax code changes. HMRC can change your tax code if your income or other circumstances change.
For example, if you take on a new job or start to receive taxable benefits your tax code could change. You may also see your tax code change if your weekly state pension amount increases.
HMRC may also change your tax code if you were previously on the wrong tax code and you owe an amount.