Most employees trust that the tax taken from their pay is correct. Usually it is. But errors are more common than many people realise, especially after a change of job, a second income or a new company benefit. With Income Tax thresholds frozen for several more years, it makes sense to be sure you are not paying more than you should.
V5 Solutions has set out a step-by-step routine you can follow in under half an hour. All figures relate to the 2026 to 2027 tax year, which runs from 6 April 2026 to 5 April 2027. Check GOV.UK for any changes announced after publication.
Why Checking Matters More While Thresholds Are Frozen
The Personal Allowance is £12,570 and the higher rate threshold is £50,270. The government has said both will remain unchanged until 5 April 2031, with the main National Insurance thresholds held alongside them.
Because the thresholds do not rise with prices, pay increases are taxed in full and a growing number of people move into the higher rate band. Your tax rate has not changed, yet a larger share of your income is going in tax. In that situation, an incorrect code or a missed allowance has an even bigger effect on what you take home. Our guide to inflation and your household budget explains why real pay can fall even when your salary goes up.
Step 1: Find Your Tax Code
Your code appears on your payslip and in your personal tax account, which you can access through the HMRC app or GOV.UK. Signing up for paperless notifications means HMRC will email you when it changes.
Step 2: Understand What the Code Says
The numbers show how much tax-free income you get from that job or pension. The letters add detail:
- L means you get the standard Personal Allowance. 1257L is the usual code.
- S or C at the start means you are taxed at Scottish or Welsh rates.
- K means you have untaxed income, such as a company benefit, that is larger than your allowance.
- BR means all income from that job is taxed at the basic rate, which is normal for a second job.
- 0T means you have no allowance on that income, often because your employer does not yet have your details.
Codes ending in W1, M1 or X are emergency codes. They are common in a new job and should be replaced once your employer receives the right information. If one stays on your payslip for more than a couple of months, contact HMRC.
Step 3: Work Through Your Payslip
- Confirm the gross pay figure, including overtime, bonuses and any shift allowances.
- Check the tax code printed matches the one in your HMRC account.
- Look at the National Insurance deduction and make sure your National Insurance number is correct.
- Review pension contributions against what you signed up for.
- Check any student loan or postgraduate loan deduction is on the plan you expect.
- Compare net pay with what arrived in your bank account.
Raise any errors with your payroll department first. If the problem lies with your tax code, HMRC can correct it. Where you have paid too much over a full tax year, HMRC normally sends a calculation and arranges a refund.
Step 4: See Whether Marriage Allowance Applies
Marriage Allowance lets a spouse or civil partner who earns under £12,570 transfer £1,260 of their unused allowance to their partner, which can save the couple as much as £252 a year. The receiving partner must be a basic rate taxpayer, which means income up to £50,270, or paying the starter, basic or intermediate rate in Scotland.
The lower earner applies, and the transfer carries on each year until cancelled. Claims can currently be backdated to 6 April 2022 for any eligible years. Full details are on the GOV.UK Marriage Allowance page.
Step 5: Update Your Budget
Once you know your correct take-home pay, build your plans around that number rather than your salary. Our overview of budgeting methods and tools can help, and our piece on costly money mistakes covers other easy wins. If you earn extra outside your job, read our explanation of the £1,000 trading allowance so it does not catch you out.
This article is general information, not financial advice. For free, impartial help with your own situation, visit MoneyHelper.
