Nobody wants a nasty surprise from HMRC. Yet every year, thousands of employees overpay tax or discover they owe money simply because they didn’t check their tax code was correct. Annually, around a third of all tax codes issued by HMRC are wrong, for one reason or another.
Your tax code matters. It tells your employer exactly how much tax to deduct from your wages each month. Get it wrong, and you could be paying hundreds or even thousands of pounds too much. Or worse, you might end up owing HMRC money you thought you’d already paid.
With this being the time of year, HMRC are issuing tax code notices. Here are a few simple checks that can prevent these problems entirely.
What is a tax code notice?
HMRC sends tax code notices to both you and your employer whenever your tax code changes. These notices explain what your tax code is and why HMRC has calculated it that way.
The most common tax code for 2026/27 is 1257L, which gives you the standard personal allowance of £12,570 before you pay any tax. But your code might be different if you have multiple jobs, receive benefits from your employer, or have other sources of income.
When does HMRC issue tax code notices?
HMRC issues bulk runs of tax code notices at specific times of year, so it’s important to know when to expect them:
January to March is when HMRC sends out the majority of annual tax code notices for the upcoming tax year that starts on 6 April. You’ll typically receive your P2 coding notice in February or early March, showing what your tax code will be for the new year.
This is the busiest period for tax code updates, and millions of notices land on doormats or appear in Personal Tax Accounts during these weeks. If you’re going to receive an annual coding notice, it’ll most likely arrive in this window.
Throughout the year, HMRC can issue new tax code notices at any time if your circumstances change. This might happen when you start a new job, begin receiving taxable benefits, or when HMRC updates their records about your income. These in-year changes can happen within 24 hours of HMRC being notified of a change.
At the start of a new tax year (early April), HMRC also issues P9 notices to employers confirming the tax codes that should be used for the year ahead.
Why your tax code might be wrong
There are several reasons why your tax code could end up incorrect:
You’ve changed jobs. Your new employer might not have the right information, putting you on an emergency tax code temporarily.
You have multiple jobs or pensions. HMRC needs to split your personal allowance across different income sources, and this doesn’t always happen correctly.
Your circumstances have changed. Marriage, a company car, private health insurance, or other taxable benefits should trigger a tax code update. If HMRC doesn’t know about these changes, your code will be wrong.
HMRC has outdated information. Sometimes HMRC’s records simply don’t match your current situation. This happens more often than you’d think.
Previous year adjustments. If you’ve underpaid or overpaid tax in previous years, HMRC might adjust your current code to collect what’s owed or refund what’s due. This adjustment needs to be correct.
How to check your tax code
Checking your tax code is straightforward and takes just a few minutes:
Check your payslip. Your tax code appears on every payslip. Compare it with the code on your notice from HMRC.
Log into your Personal Tax Account. This is the easiest way to see your current tax code and the calculation behind it. You can access this at any time through the HMRC website.
Look at your annual coding notice. HMRC sends you a notice each year showing how they’ve calculated your code. Read through it carefully and check that all the information is correct.
Verify the details. Make sure HMRC has recorded all your jobs and pensions. Check that the allowances and deductions listed match your actual circumstances. Look for any adjustments for previous years and verify they’re accurate.
What to check on your tax code notice
When your notice arrives, don’t just file it away. Take a few minutes to check these key things:
Personal allowances. Confirm you’re receiving the correct personal allowance for your situation. The standard allowance for 2026/27 is £12,570, but yours might be different.
All income sources listed. Every job and pension should appear on your notice. If one’s missing, HMRC won’t be taxing you correctly.
Taxable benefits. Company cars, private medical insurance, and other benefits should be included if you receive them.
Previous year adjustments. If HMRC is collecting underpaid tax or refunding overpaid tax through your code, check the amount is what you expect.
The code matches your payslip. Your employer should be using the code shown on the notice. If they’re using a different code, something’s gone wrong.
What to do if your tax code is wrong
If you spot a problem with your tax code, you need to act quickly. Here’s what to do:
Contact HMRC directly. It’s the employee’s responsibility to check their tax code is correct and to contact HMRC if it isn’t. You can call them on 0300 200 3300 or update your details through your Personal Tax Account online.
Gather your evidence. Before you contact HMRC, have your payslips, P45, P60, and any documents showing benefits or income sources ready. The more information you can provide, the faster HMRC can correct your code.
Don’t ask your employer to fix it. Many employees make this mistake. Your employer must use the tax code HMRC provides. They can’t change it based on what you tell them. Only HMRC can issue a new tax code.
Act fast. The sooner you contact HMRC, the sooner your code will be corrected. This means less tax to reclaim later or less underpayment to sort out at year end.
Check the updated code is applied. Once HMRC issues a new code, they send it electronically to your employer, usually within 24 hours. Check your next payslip to confirm the new code is being used.
What if you’ve already overpaid?
If you discover you’ve been on the wrong tax code and have overpaid tax, don’t worry. HMRC will refund what you’re owed, though it might take some time.
For overpayments in the current tax year, HMRC typically refunds the money by adjusting your tax code to collect less tax in future months. Any overpaid tax will be refunded through payroll on the next payroll run. For previous years, they’ll usually send you a cheque or make a bank transfer.
For underpayments, HMRC will normally collect what’s owed by adjusting your tax code for the following year, spreading the collection over several months. This is much better than receiving a large tax bill all at once.
Your responsibility as an employee
Here’s the bottom line: it’s your responsibility to make sure you’re paying the right amount of tax.
Your employer has a duty to apply the tax code HMRC provides. They can’t override it, even if you ask them to. The system only works when employees check their codes and contact HMRC directly when something looks wrong.
Making this a habit takes minutes but could save you hundreds of pounds and a lot of stress. When your tax code notice arrives, open it. Check it out. And if anything looks wrong, pick up the phone to HMRC straight away.
Don’t wait until the end of the tax year to discover you’ve been paying the wrong amount all along. By then, fixing the problem becomes much more complicated.
