Martin Lewis site urges UK workers to check payslips for wrong tax codes and unclaimed pay

MoneySavingExpert, the consumer finance site founded by Martin Lewis, has urged UK workers to check their payslips and tax codes immediately, warning that errors can leave people overpaying tax by thousands or facing large unexpected bills later.

The site’s journalists told readers that millions of taxpayers are placed in incorrect tax bands each year, and that it is the individual’s legal responsibility to ensure their tax code is correct. MoneySavingExpert said employees should check tax codes shown on payslips, P45s, P60s, PAYE notices (P2) and pension advice slips, or verify them via HM Revenue & Customs or the official HMRC app.

The site highlighted a case in which a woman, identified as Michele, discovered she had been taxed on all her earnings without receiving any personal allowance after a period of self-employment. After contacting HMRC and her employer, Michele was refunded £9,400, MoneySavingExpert reported. The site cautioned that while overpayments can result in refunds, being assigned a tax code that underestimates liability can lead to “bill shock” if the mistake is not corrected.

Under current UK rules cited by MoneySavingExpert, the personal allowance — the amount of income not subject to Income Tax — is £12,570. Income above that amount is taxed at 20% up to £50,270, 40% from £50,271 to £125,140, and 45% above £125,140. Tax codes appear as combinations of letters and numbers, such as 1257L, S1257L, C1257L, BR or K497; employers and pension providers use the code to determine how much tax to deduct under PAYE (Pay As You Earn).

MoneySavingExpert also reminded workers that each source of income (for example, a job and a private pension) may carry a different tax code, and that certain groups — including the self-employed, the unemployed, or people receiving only the state pension — may not have a tax code. The site said anyone with concerns should contact HMRC to rectify codes and seek refunds where appropriate.

In addition to tax codes, MoneySavingExpert’s team flagged that employees may be missing statutory holiday pay. The site recounted the example of a 17-year-old part-time worker, named Lola in the report, who discovered she was owed two years of backdated holiday pay amounting to £218 after being dismissed. She also recovered an additional £23.87 from another employer, bringing the total to about £240.

Statutory annual leave in the UK is a minimum of 5.6 working weeks per year; for a full-time worker on a five-day week this equates to about 28 days, while someone working one day a week accrues roughly 11.2 days. MoneySavingExpert said employees who receive payslips are likely classed as employees for leave purposes and should check contracts and pay records to confirm accrued and unpaid holiday entitlement. Employers are obliged to pay for unused statutory leave when an employment relationship ends.

The site stressed practical steps: check payslips and formal documents for the tax code, confirm each income source has the correct code applied, and contact HMRC or an employer payroll department where discrepancies appear. MoneySavingExpert also recommended checking for unclaimed pay, such as unpaid holiday, and pursuing back pay where applicable.

Tax and employment specialists say mistakes can arise after changes in working status, such as moving from self-employment to salaried work, holding multiple jobs, or starting or stopping pension payments. HMRC guidance notes it may take time for records to update after changes in circumstance, and those affected can request an amended tax code or claim repayment for overpaid tax through HMRC.

MoneySavingExpert’s reminder follows broader consumer advice trends urging greater individual scrutiny of payroll and tax records amid a complex benefits and taxation landscape. The site advised workers to act promptly, saying that identifying errors can result in substantial refunds in some cases and can prevent future liabilities when underpayments are corrected.