Martin Lewis urges workers to check payslips for ‘X’ code that could be adding to bills

The Money Saving Expert says millions of workers are paying the wrong amount of tax

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Martin Lewis is urging workers to check their payslips as he warns millions of people are on the wrong tax code.

The MoneySavingExpert founder encouraged people to look for an ‘X’ at the end of their tax code, as this could indicate you are paying emergency tax.

Emergency tax codes are temporary and mean that you will pay tax on all of your income above the basic Personal Allowance. You might be put on an emergency tax code if HMRC does not receive your income details in time after a change in circumstances, such as a new job, working for an employer after being self-employed, or getting company benefits of the State Pension.

The tax code will usually be updated when you or your employer provide HMRC the correct details.  If your change in circumstances means you have not paid the right amount of tax, you will stay on the emergency tax code until you’ve paid the correct tax for the year.

If HMRC updates your tax code and you have paid too much tax, HMRC will send you either a tax calculation letter (known as a ‘P800’) or a Simple Assessment letter.

Martin Lewis is urging workers to check their payslips (Photo: ITV)Martin Lewis is urging workers to check their payslips (Photo: ITV)
Martin Lewis is urging workers to check their payslips (Photo: ITV)

Mr Lewis warned workers to check their tax code during ITV’s The Martin Lewis Money Show after a viewer, called Tina, sought advice after being overtaxed.

She said: “I’m on a 16 hour contract, and last month, I did lots of overtime. I was put on the basic rate temporarily and overtaxed by more than £800. My tax code is now back to 1257L, but I’m short £500, worrying about money. Will I get a tax rebate?”

Mr Lewis then directed the question to tax expert Rebecca Benneyworth, who explained: “It depends whether she’s on a Month One tax code or not. Month One is often referred to as Emergency Code. If she is, she needs to sort that with HMRC, either by phoning them or by going into her personal tax account through the HMRC app.”

Ms Benneyworth said if employees suspect they have been put on an emergency tax code, they should look for an ‘X’ on their payslip. She added: “On her tax code, she’ll have 1257L. If she’s got an ‘X’ on the end (1257LX), she’s on Month One. Otherwise, if it’s not got an ‘X’ on the end, it should come back in her next pay packet. If it doesn’t, speak to your employer.”

The government says if you are on an emergency tax code your payslip will show either:

  • 1257 W1
  • 1257 M1
  • 1257 X

Mr Lewis added:  “If you’ve got the wrong tax code, go to HMRC. If you’re not getting the tax back, go and talk politely to your employer. Many payroll departments are actually pretty helpful if you’re struggling with this.”

If your tax code has changed, you can use the Get help understanding your tax code tool to find out how the change will affect the amount of tax you pay, and what you may need to do next. You can sign into your personal tax account to check or update your details with HMRC.

If you think your tax code is wrong, you can use the check your Income Tax online service to update your employment details, or tell HMRC about a change in income that may have affected your tax code.

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