HMRC issuing letters to people who are owed £689 this April

HMRC is sending letters to people who have overpaid or underpaid tax over the last 12 months - and you could be owed a pretty sum.

People should receive a P800 at the end of each tax year which runs between April 6 and April 5 the next year.

A survey from Canada Life found that 31% of adults have been on the wrong tax code at some point, and the average overpayment as a result is around £689. If you're owed money back, you should be able to claim this online through Gov.UK using your Government Gateway ID and password.

If you fail to claim within 21 days, you'll get a cheque from the HMRC in the post. Tax codes are used to show how much tax should be taken from your pay or pension, but millions of workers are put on the wrong code each year.

The Mirror reports that you can go back as far as four tax years, so you can currently claim as far back as the 2019/2020 tax year. But as of April 6, you'll only be able to revisit as far back as the 2020/21 tax year.

The most common code is 1257L for people who have just one job or pension, but not everyone will be on this. To find out what tax code you're on, you can check your most recent payslip or your P45 if you've just quit a job.

GOV.UK also has a webpage which allows users to see their tax code, and you'll need to use your free Government Gateway ID to access this. Money Saving Expert also has a free tax code calculator which allows people to get a rough idea of whether their current tax code is correct.

If you believe you have been issued the wrong tax code, then you should contact HMRC and ask them to investigate it on 0300 200 3300. Or, if you are found to have being underpaying tax, this will need to be repaid.