April payslips may provide a nasty shock after HMRC admits tax coding errors

THOUSANDS of workers could get a nasty shock when they see their April payslips after the tax office admitted it had sent out incorrect tax codes.

As the end of the first month of the new tax year approaches, HM Revenue & Customs (HMRC) is advising employees to check their April pay details to ensure that they are paying the right amount of tax after revealing that many were not sent the same PAYE code as their employer. Look out for unexpected changes to the amount of tax paid and contact HMRC if you notice any discrepancies.

The problem has been highlighted after HMRC introduced a new national insurance and PAYE system. This had brought to light discrepancies in its records, resulting in incorrect coding notices being issued.

The issue was identified earlier this year but the extent of the errors will only become clear in the coming weeks as employees receive the first payslips of the new tax year, according to the Low Incomes Tax Reform group. It said incorrect tax payments will be made where:

&149 incorrect tax codes are received by employees but not spotted;

&149 new codes were not issued in cases where they should have been;

&149 codes refer to employment or pensions that ended before April 2009;

• people have been given a code but their employer or pension provider has not, or has been given a different one, and subsequently deducted too much tax.

There have also been issues affecting pensioners, such as tax codes not including the state pension or showing the wrong state pension figure.

The Scotsman has been contacted by several pensioners in recent weeks after they noticed that their tax codes had been changed without good reason.

Many were incorrectly, and for the first time, given a code beginning with the letter K, which denotes that their non-state pension income had exceeded the allowances to which they were entitled.

One reader was also given a T code, suggesting he had income that affected his entitlement to the full personal allowance.

In this case, and most others, the error was corrected by HMRC, which can be contacted on 0845 3000 627 by anyone who believes their code may be incorrect.