HMRC sending letters to people owed £689 - see if you are due money back

HMRC is sending out letters to tell people if they have overpaid or underpaid tax - and you could discover that you're owed hundreds of pounds.

You should receive a P800 at the end of every tax year. Unlike the regular calendar year, the tax year runs from April 6 until April 5 the following year. A survey by financial services company Canada Life found 31% of adults have been on the wrong tax code, with the average overpayment being £689.

If you’re owed money back, you should be able to claim this online through GOV.UK using your Government Gateway user ID and password. If you don’t claim your refund online within 21 days, you’ll be sent a cheque in the post from HMRC.

Tax codes are used to show how much tax should be taken from your pay or pension - however, millions of workers are put on the wrong tax code each year. You can go back as far as four tax years, so this means you can currently claim back as far as the 2019/2020 tax year. But from April 6 onwards, you will only be able to go back as far as the 2020/2021 tax year.

The most common code is 1257L for people who have one job or pension - although not everyone will be on this. To find your tax code, check your latest payslip, or your P45 if you have recently quit your job. GOV.UK has a dedicated webpage where you can see your tax code as well - to check it online, you will need to register for a free government gateway ID.

MoneySavingExpert then has a free tax code calculator that you can use to get a rough idea as to whether yours is correct. No tax calculator will be able to tell you for definite if you are on the right code - but this should give you a good indication. If you believe your tax code is wrong, you can contact HMRC and ask them to investigate by calling 0300 200 3300. If you find out you’ve been underpaying tax, you would owe HMRC money as the tax would need to be paid back.