EMPLOYEES could be missing out on thousands of pounds every year because of simple payslip mistakes.
Wage slips are something most of us barely glance at, but experts are warning that failing to check the small print could leave workers either overpaying tax, losing holiday pay, or facing huge bills from HMRC.
Brits could be missing out on thousands due to payslip errors[/caption]
One of the biggest errors is being put on the wrong tax code.
This might not sound serious, but if you’re paying too much tax each month, it adds up fast.
Most workers in a single job should be on the 1257L code, which lets you earn £12,570 tax-free each year.
But if your employer gives you extras like private health insurance, your allowance could shrink, changing your code to something like 1100L instead.
Worse still, if you’ve recently changed jobs and see a code like C0T, W1, M1 or X, you could be on an emergency tax code, which means you’re paying far more tax than you should.
If you’ve been in your new job more than five weeks and still see one of these codes, speak to your payroll department immediately.
Another costly mistake is missing or miscalculated annual leave.
Many workers wrongly assume their holiday pay is sorted but if you take more days off than you’re entitled to and leave partway through the tax year, your employer could demand money back.
On the flip side, some employees are short-changed because they’ve not taken the time off they’ve earned.
It’s also common for holiday pay to be miscalculated, especially if you work irregular hours.
Keeping track of your own days and comparing them against your payslip could save you hundreds.
Finally, bonuses and commission payments can be a major trap.
These are classed as taxable income, but in some cases they’re added to payslips without the right deductions.
If you’ve been handed a lump sum that hasn’t been taxed, it might feel like a win but it could come back to bite you.
HMRC may later demand the unpaid tax, potentially with interest and fines.
If a big bonus pushes you into a higher tax band, you could also find yourself owing more than expected.
Always check that any extra earnings have had tax and National Insurance taken off.
It might seem like a headache, but checking your payslip each month can save you serious cash.
If something looks off, speak to your payroll team and if you’re still unsure, log in to your HMRC tax account online to check what they have on file for you.
Expert Marc Crosby at Moneymagpie.com said: “The majority of payslip errors are genuine mistakes that can be easily fixed.
“But without checking every payslip, you could be missing out on money owed to you or – worse – end up owing a lot in repayments or underpaid tax.
“Employers may not always realise the full impact of what might seem like a small error, but particularly where Universal Credit and other benefits are involved, it can have a long-lasting knock-on effect which can be time consuming and stressful to fix.
Fast action is vital to prevent small errors becoming financial disasters!”
How to check your tax code
You can check your current tax code by logging into your personal tax account online, using the HMRC app, or digging out your latest payslip.
You could have also received a Tax Code Notice from HMRC in the post, so it’s always worth checking recent letters too.
If the numbers don’t add up, contact HMRC directly.
You can call them on 0300 200 3300 or write to: Pay As You Earn and Self Assessment, HMRC, BX9 1AS.
Those who’ve overpaid could see a refund land in their bank within five days once their claim is processed or receive a cheque in the post within two weeks.
But it’s not always good news, some may find they underpaid tax and owe HMRC money.
If that’s the case, most will be asked to repay it gradually over 12 months.
If you’re owed money, you may also receive a P800 letter or a simple assessment telling you how much you’re due and how to claim it.
There’s a four-year limit on claiming back overpaid tax, so if you think you’ve been overcharged, don’t delay.
Whether you’re a full-time employee, working multiple jobs, or have just switched roles, it’s worth double checking your code because a five-minute check could leave you hundreds better off.
