Why you need to check your tax code

You could be paying too much, or too little tax by being on the wrong tax code - and around this time of year is particularly important to check, as the new tax year (2025/26) brings in impending tax code alterations.

Yes, it might take a bit of time and effort, but just think of the sense of self-satisfaction when you can tick at least one item off that never-ending list.

Why your tax code matters?

Your employer or pension provider uses your tax code to calculate the amount of Income Tax they need to take from your pay or pension.

You can find your tax code on your payslip. It’s usually made up of letters and numbers, for example: 1257L. This is the tax code currently used for most people who have one job or pension.

The numbers refer to how much tax-free income you get in that year, and the letters represent your situation and how it affects your allowance.

How do I know if I’ve got the right code?

Your tax code can change with your circumstances, things like changing jobs or if you’ve experienced personal changes can affect your tax code. You can find a list of reasons why your tax code may change on the Government’s website.

If your tax code changes, HMRC will usually contact you to explain how they’ve worked out your individual tax code. But, if you think your tax code is wrong, you need to let HMRC know. The onus is on you to make sure it’s correct.

The quickest way to get in touch with HMRC is to phone them on 0300 200 3300.

You can also check your tax code through the HMRC app or online via the Government Gateway.

The main reasons why your tax code might change include:

Job changes: if you change jobs, start a new job, or start earning income from an additional job or pension, your tax code may change to account for any taxable income changes.

Changes in your personal circumstances:  if you start claiming your State Pension or you start to claim taxable state benefits, your tax code may change.

Benefits or deductions: if you get taxable work benefits like a company car or medical insurance, you might need a new tax code.

Underpayment or overpayment: if you’ve paid incorrect taxes in the past, HMRC may adjust your tax code to correct this.

Anything else I need to know?

Sometimes you may be put on an emergency tax code. This is because HMRC hasn’t received your income details on time. This might happen if you start a new job, and your new employer doesn’t have your P45, for example.

Despite the dramatic name, emergency tax codes are only temporary. An emergency tax code could lead to an overpayment of tax, though – which HMRC may not automatically refund you for.

It’s worth checking your P800 at the end of the tax year to make sure everything looks as it should be and claim any overpayment of tax you’re owed.

HMRC will adjust your code once it has enough information to do so and you'll receive a letter to tell you when your tax code has been updated. But it’s still worth taking the time to check your code is correct, anyway.