Martin Lewis expert tax warning as people told they could be 'seriously underpaying'

Martin Lewis
-Credit: (Image: ITV)


A Martin Lewis expert has issued a stark warning that millions of Brits could be paying the wrong amount in tax. A financial expert made the announcement during the latest episode of The Martin Lewis Podcast on Monday.

He was joined by tax specialist Rebecca Benneyworth. A listener wrote into the BBC podcast, querying: "I have 2 jobs, one main job and one agency yet I have the same tax code 1269L, why?"

Rebecca responded: "Because they're wrong...The fact they're both the same tells me they're wrong. If at your main job you're earning more than £12,570 then you've got no allowances left for the other job so you'll have a different tax code."

She advised the caller, Stephen, to rectify the issue as soon as possible, warning him he's currently "seriously underpaying tax". Furthermore, she cautioned it would "come home to roost", and explained there are numerous ways a tax code can be incorrect due to errors by HMRC, an employer or the employee themselves.

Rebecca suggested the likely scenario in Stephen's case was a misunderstanding between him or the agency: "When you get your agency job you will have a been given a starter form and can tick a box on what your circumstances are.

"One of the boxes will say 'this is my main job' or 'this is my only job' and that helps HMRC get your tax code right. When the payroll gets filed to HMRC they'll send the tax code back to your employer. You really do need to sort it out," she added, her voice tinged with concern.

Rebecca explained that for most people, the tax code you'll see is 1257L, which reflects the standard personal allowance of £12,570 that you don't have to pay tax on. She elaborated: "Generally speaking your tax code will be 1257L which is a basic personal allowance. How they get the tax code is just chop the last number off, nothing scientific about it."

However, some individuals may have larger tax codes, signifying a higher tax-free allowance. She further commented on why some might have a higher code, saying: "They might have put more money into a pension last year, if you're a high rate taxpayer, and HMRC will assume you're going to carry on putting money in, so (HMRC will say) 'Here's an extra bit of relief on that'. It might be you're a nurse and you've claimed to launder a uniform."

Rebecca also noted that those with a tax code below 1257 could be paying off an outstanding tax bill, reducing their tax-free allowance.