Audience: PAYE employees
Most employed people in the UK trust that the tax deducted from their wages is correct. After all, the whole point of PAYE is that the system handles everything automatically. But HMRC's own data shows that millions of employees are overpaying or underpaying income tax each year — often without realising it. A little vigilance can go a long way towards ensuring you are not giving the government more than your fair share.
This guide walks you through the key checks you can do to verify that your income tax and National Insurance deductions are correct.
Your payslip is the first place to check. It should show your gross pay (before deductions), your tax code, the amount of income tax deducted, the amount of National Insurance deducted, any other deductions such as pension contributions, and your net pay (the amount actually paid to you).
Look at the tax code first. As explained in our separate guide on tax codes, most people should have the code 1257L for 2024/25. If your code is different — particularly if it is an emergency code like 1257L W1 — that is worth investigating immediately.
Next, check whether the income tax deducted looks reasonable. For a basic rate taxpayer earning, say, £30,000 a year, the annual income tax bill should be approximately £3,486 — roughly £290 per month. If the figure on your payslip looks significantly higher or lower, that warrants further investigation.
The quickest and most reliable way to check your tax is to use an online tax calculator. A good PAYE calculator will ask for your gross salary (or hourly rate and hours worked), your tax code, and any pension contributions you make. It will then calculate exactly how much income tax and National Insurance you should be paying — and you can compare the result directly to your payslip.
Be sure to use a calculator that is up to date with the current tax year's rates and thresholds. Tax rates, personal allowances, and National Insurance thresholds can change from year to year, so using an outdated calculator could give you misleading results.
HMRC's Personal Tax Account (available at gov.uk) is an invaluable resource for anyone who wants to take control of their tax affairs. Once you have set up an account using your National Insurance number, you can view your current tax code and why it has been set at that level; check your income and tax records for the current and previous tax years; see whether HMRC believes you have paid too much or too little tax; and update your personal details so that HMRC has the correct information.
It is worth checking your Personal Tax Account at least once a year — ideally at the start of each new tax year in April — to catch any discrepancies early before they become larger problems.
There are several circumstances that commonly lead to overpaying income tax under PAYE. You have started a new job without providing a P45, resulting in an emergency tax code. You have only worked for part of the tax year — for example, if you were unemployed for several months. You have received a one-off payment such as a bonus that temporarily pushed you into a higher tax band. You have changed jobs and had a period without income in between, but both employers operated PAYE as if you were working all year. Your tax code has been incorrectly reduced due to outdated benefit information.
In all of these cases, the cumulative nature of PAYE should theoretically correct itself over the course of the tax year. But it does not always do so automatically, particularly if your circumstances are complex.
If you believe you have overpaid income tax during the current tax year, the simplest approach is to contact HMRC and explain the situation. They can review your records and, if appropriate, issue a revised tax code that will result in less tax being deducted from your remaining pay — effectively giving you your refund gradually through the rest of the year.
If the tax year has already ended and you believe you overpaid, HMRC will send a P800 tax calculation to people who have underpaid or overpaid. If you have not received one and believe you are owed a refund, you can claim directly through your Personal Tax Account or by contacting HMRC by phone or post. Refunds are typically paid directly to your bank account.
Bear in mind that you can claim a tax refund going back up to four previous tax years. So if you overpaid in 2021/22, you still have time to claim — but not indefinitely.
As well as income tax, it is worth checking your National Insurance contributions. For 2024/25, employees pay 8% on earnings between £12,570 and £50,270, and 2% above that. If your payslip shows National Insurance deductions that do not correspond to these rates applied to your earnings above £12,570, there may be an error.
You can check your National Insurance record through your Personal Tax Account. This record shows how many qualifying years you have built up towards your State Pension, and whether there are any gaps. If there are gaps — perhaps from periods of self-employment, low earnings, or time abroad — you may be able to make voluntary Class 3 NI contributions to fill them.
**Disclaimer: ***This article is for general information purposes only and does not constitute tax advice. Tax rules can change and individual circumstances vary. Always consult a qualified tax adviser or contact HMRC directly for advice specific to your situation.*