More than two in five UK adults (43%) that have checked their tax code have found they are on the wrong one, new research from Canada Life has revealed.
While a fifth (20%) of those who were on the wrong tax code were underpaying as a result, seven in every 10 taxpayers (71%) were overpaying.
Those who paid too much gave £694 more than they were supposed to on average, with one in seven (13%) overpaying by more than £1,000. Canada Life has estimated that this totals £8.2bn in overpayments because of wrong tax codes.
With only 36% of UK adults comfortable with how to claim back overpaid tax, this leaves approximately 34 million individuals in the country who are unsure about the process, many of which could currently be owed an unclaimed tax rebate.
Conversely, Canada Life’s research, which was based on a study of 2,000 UK adults, found that two thirds (67%) believe they are on the right tax code, but just 38% know this for certain and taxpayers who have checked their code have not checked their code for two years on average.
However, 38% of respondents said they have noticed a change in the amount they pay in income tax in the past three months.
“Understanding your tax code is vital to ensure you’re paying the right amount of income tax,” commented technical director at Canada Life, Andrew Tully. “Those who are not on the right code may find themselves out of pocket. If it’s wrong, you may end up contributing more or less than you’re supposed to.
“And although overpaying means you should get a rebate – if and when it’s spotted – underpaying means you may have to pay HMRC a lump sum to make up the shortfall. If you are in doubt about your tax code, there are a variety of online resources to help you check, including salary and pension withdrawal calculators.”
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In this episode of the Barclays Mortgage Insider Podcast, host Phil Spencer is joined by Lucian Cook, Head of Research at Savills, and Ross Jones, founder of Home Financial and Evolve Commercial Finance, to explore how regional trends are redefining the UK housing, mortgage and buy-to-let markets.
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In this episode of the Barclays Mortgage Insider Podcast, host Phil Spencer is joined by Lucian Cook, Head of Research at Savills, and Ross Jones, founder of Home Financial and Evolve Commercial Finance.
In this episode of the Barclays Mortgage Insider Podcast, host Phil Spencer is joined by Lucian Cook, Head of Research at Savills, and Ross Jones, founder of Home Financial and Evolve Commercial Finance.
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