People urged to check P60 this month for tax error worth £700 on average
As employers prepare to issue P60s before the May 31 deadline, tax refund experts are urging people to check it immediately as just one wrong letter could mean you may have been overpaying tax for months.
P60s will be issued to anyone who was in full-time employment on April 5. The document shows how much tax you have paid over the tax year, and it could be the key to unlocking hundreds or even thousands of pounds in unclaimed refunds.
Robert Jones, CEO of the tax refund company, Swift Refunds advises that your P60 isn't just a year-end tax summary, it may also be a 'warning sign'.
'Your P60 isn't just a year-end summary, it may also be a warning sign,' says Robert Jones, CEO of the tax refund company, Swift Refunds. 'One incorrect tax code and HMRC could be taking too much out of your wages every month.'
He explained: 'The average tax overpayment due to incorrect codes is nearly £700, but recent figures from HM Revenue and Customs (HMRC) show the real impact may be even higher..'
The latest UK Government data i ndicates that between January 1 and March 31, 2025, HMRC repaid a staggering £44 million in overpaid tax, with the average refund hitting £2,881 per saver.
What to check
The most important detail to check is your 'final tax code', usually listed near the top of your P60.
The standard code for most workers in the UK is 1257L, which means you're entitled to the full Personal Allowance of £12,570 before any tax is deducted.
If you spot one of the codes listed below instead, you could be missing out:
BR: All your income is taxed at 20%, with no tax-free allowance
D0 or D1: Taxed at higher rates, without any allowance
No 'L' in your code: You might not be receiving the standard £12,570 Personal Allowance
These codes are not always mistakes, but they often appear when:
You've changed jobs
You're working multiple roles
You've had a period of contract or freelance work
HMRC has outdated or incorrect information about your situation
Unless you spot it and claim it, the system won't correct it automatically. The responsibility of checking and correcting your tax code is down to you, the employee - it is not the responsibility of your employer or HMRC.
Checking your tax code
The easiest way to do this is to look at your payslip. One you have a note of your Personal Allowance tax code, you can go to the GOV.UK website and use the online 'Check your Income Tax for the current year" service.
This tool, which covers the current tax year, can be used to check your tax code and Personal Allowance, and to see if a tax code has changed.
Other options available through this online service include allowing users to see an estimate of how much tax they will pay over the whole tax year.
However, the service cannot be used by self-employed workers. The GOV.UK website explains: "You cannot use this service if Self Assessment is the only way you pay Income Tax.'
What the tax code numbers mean
The numbers in an employee's tax code show how much tax-free income they get in that tax year, this is known as your Personal Allowance. You usually multiply the number in the tax code by 10 to get the total amount of income they can earn before being taxed.
For example, an employee with the tax code 1257L can earn £12,570 before being taxed. If they earn £30,000 per year, taxable income is £17,430 (£30,000 - £12,570).
What the letters mean
Letters in an employee's tax code refer to their situation and how it affects their Personal Allowance. The full list of tax code letters and what they mean can be found on the UK.Gov website here.
Most commonly used letters:
L - For an employee entitled to the standard tax-free Personal Allowance
S - For an employee whose main home is in Scotland
BR/ SBR - For a second job or pension
M - For an employee whose spouse or civil partner has transferred some of their Personal Allowance
N - For an employee who has transferred some of their Personal Allowance to their spouse or civil partner
T - When HMRC needs to review some items with the employee
If your tax code has 'W1', 'M1' or 'X' at the end
W1 (week 1) and M1 (month 1) are emergency tax codes and appear at the end of an employee's tax code, for example '577L W1', '577L M1' or '577L X'.
If your tax code has a 'K' at the beginning
Tax codes with 'K' at the beginning mean you have income not being taxed another way and it's worth more than your tax-free allowance.
For most people, this happens when you're:
paying tax you owe from a previous year through your wages or pension
getting benefits you need to pay tax on - these can be state benefits or company benefits
Your employer or pension provider takes the tax due on the income that has not been taxed from your wages or pension - even if another organisation is paying the untaxed income to you.
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