THOUSANDS of workers could have overpaid tax on their summer jobs – but there’s a way to claim it back.
You may have overpaid if you were put on the wrong tax code when you started your job.
Most people can earn up to £12,570 a year without paying any tax – this is known as your tax-free personal allowance.
If you’re doing temporary or seasonal work then it’s common for the taxman to assume the amount you’re paid in that period will be the same across the year.
That’s why you can sometimes end up paying too much tax, or even end up paying when you shouldn’t at all.
HMRC works out how much to tax you – or whether you should pay any at all – based on the tax code it’s given by your employer.
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Your tax code is a short string of letters and numbers, for example 1257L.
To make sure you’re put on the right tax code, when you start your new job you could give your employer either:
- A P45 from your previous employer
- A starter checklist, which is a form you complete to tell your employer about your circumstances.
If you didn’t provide either of these, or your employer made a mistake or couldn’t process the information on time, you might be put on a temporary emergency tax code instead.
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Emergency tax codes mean the tax is calculated just on that week’s or month’s pay in isolation, so your £12,750 personal allowance for the year isn’t taken into account.
So if you stopped working after a few weeks or months, you may have earned well below the threshold but still been taxed.
How to claim a refund
You can claim a refund back from HMRC.
Sometimes it will realise the mistake first and send you a letter letting you know you’re due a refund.
In this case, you usually don’t need to do anything as you’ll be refunded automatically.
If you finished the temporary job and won’t work again until the end of this tax year (April 5, 2027) then you can claim a refund online.
If you’re successful, the refund will be paid directly into your bank account.
However, if you are still working or want to work again this tax year you’ll need to take slightly different steps.
First, check your tax code and confirm that you’re on the right one.
You can find this on your payslips or through your Gov.uk personal tax account.
If the tax code ends in W1, M1 or X then you’re on an emergency tax code.
To resolve it, you’ll need to get in touch with HMRC.
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You’ll then get a new tax code which will help you reclaim any overpaid tax.
Your employer should then adjust your pay to refund the overpaid tax.