What to do if your tax code is wrong?

Tax codes are used by HM Revenue & Customs (HMRC) to calculate how much Income Tax should be deducted from your salary or pension. Most of the time, your tax code is correct and reflects your personal allowance and income. However, sometimes errors can occur. An incorrect tax code can lead to underpaying or overpaying tax, which can cause unnecessary stress and financial complications. If you’ve noticed something unusual or have been informed that your tax code is wrong, it’s essential to act quickly and resolve the issue. In this article, we’ll guide you through the steps you need to take, answer common concerns, and explain how tax codes work.

How do you know if your tax code is wrong?

The first sign that your tax code is incorrect is usually a change in your take-home pay. If you notice that your salary has dropped without reason, it might be due to an incorrect tax code. For example, if you’re being taxed on more income than you should be, or you’re on an emergency tax code, this will be reflected in your payslip.

You can also check your tax code on your payslip or through your personal tax account on the HMRC website. If your tax code doesn’t seem to match your allowances or income, it’s worth investigating further.

Common reasons for a wrong tax code

Several factors can result in an incorrect tax code, including:

1. Change in employment – Moving jobs or having multiple jobs can sometimes confuse the tax system.

2. Incorrect personal allowance – Your allowances may have been miscalculated or not updated.

3. Pension payments – Additional pension income may not be properly accounted for.

4. Benefits and expenses – Taxable benefits such as company cars, medical insurance, or expenses can affect your tax code.

5. Outdated information – HMRC may not have the latest details about your income or deductions.

6. Emergency tax codes – When starting a new job, you might temporarily be placed on an emergency tax code, resulting in higher deductions until the correct code is issued.

What is a normal tax code?

For the tax year 2025/26, the standard personal allowance is £12,570. If you're entitled to the full allowance and have no other adjustments, your tax code should be 1257L. The letters in the tax code indicate specific adjustments. For example:

• L – You’re entitled to the standard allowance.

• M – You’ve received a portion of your spouse’s allowance.

• T – Other adjustments are being made to your tax code.

Emergency tax codes, such as 1257 W1, 1257 M1, or 1257 X, mean your tax is calculated without considering your full allowances, often resulting in more tax being deducted until the correct code is applied.

What to do if your tax code is wrong?

Start by reviewing your payslip, P60, or P45 forms. Confirm that the code matches your circumstances. If something doesn’t add up – perhaps the allowance is wrong, or you see “emergency tax code” listed – note the details.
You can also check your tax code on your payslip or through your personal tax account on the HMRC website. If your tax code doesn’t seem to match your allowances or income, it’s worth investigating further.
If you’re filing a self-assessment tax return and need more detailed guidance on how an incorrect tax code could affect your filing, you can read our dedicated article on what to do if your tax code is incorrect for your self-assessment

How do I claim back overpaid tax?

If you’ve paid too much tax due to an incorrect code, HMRC will usually adjust this automatically through your future payslips once the correct code is applied. However, if the overpayment continues, you can request a refund.

Steps to claim overpaid tax:

1. Check your current and past payslips to confirm overpayment.

2. Log in to your personal tax account and follow the steps to request a refund.

3. Alternatively, contact HMRC by phone or post and provide the necessary details.

What if HMRC makes a mistake on overpayment?

Mistakes happen. If HMRC’s error results in overpayment, you have the right to request a correction. They might ask for supporting documentation such as payslips, P60s, or proof of income.

If the situation is complicated, it might be helpful to speak to an accountant or tax advisor who can guide you through the process.

How long does it take for HMRC to correct the tax code?

The timeframe depends on how quickly HMRC processes your request and your employer updates payroll information. Generally, corrections take between a few days to a few weeks. If you’re on an emergency tax code, it’s advisable to check monthly until the correct code is applied.

What happens if I don’t correct the tax code?

Failing to address a wrong tax code can lead to:

• Continued overpayment or underpayment of tax

• Confusion during tax returns

• Potential penalties if underpayment is discovered later

It's always best to resolve issues as soon as possible.

How do I work out if my tax code is correct?

You can estimate your tax deductions by understanding your income and allowances:

1. Check the allowance – Does the tax code match your entitled personal allowance?

2. Account for additional income – Are pensions, benefits, or second jobs factored in?

3. Use online calculators – HMRC and other financial websites offer tools to estimate tax deductions.

If you're unsure, a qualified accountant can review your payslips and advise you.

Final thoughts

Tax code errors are more common than you think, and they can easily happen due to changes in employment, benefits, or incomplete information. The key is to stay proactive, check your payslips regularly, and contact HMRC as soon as you spot discrepancies. Resolving tax code issues promptly ensures you’re neither overpaying nor underpaying tax, and it keeps your financial records accurate and stress-free.

If you’re unsure about how to proceed or need expert assistance, consulting an accountant can give you peace of mind and ensure your tax matters are handled correctly.