CIOT: Check your tax code – you may be entitled to a refund

By checking PAYE coding notices Britain’s taxpayers can make sure that they are paying the right amount of tax.

Many taxpayers do not know they may be paying more tax than they should. Others may not be paying as much as they should and may not realise that they have a responsibility to let HMRC know.

Taxpayers should check their Pay As You Earn (PAYE) coding notice from HM Revenue & Customs (HMRC).

John Cullinane, President of The Chartered Institute of Taxation (CIOT), says: “Those taxpayers who complete a self-assessment tax form are given an explicit opportunity to state how much tax they should pay. For everyone else the PAYE code is effectively their tax return – yet most UK taxpayers assume the PAYE code and coding notices are correct. This is like signing your tax return without reading it.”

The CIOT recommends that all PAYE taxpayers check their PAYE code and coding notices they receive against their own income and reliefs that may be available. There is information on the HMRC website about income that must be reported and reliefs that may be claimed. PAYE taxpayers should keep records of their income, the tax they have paid and check any communication HMRC send them.

In recent research undertaken on behalf of the CIOT, 47% of UK taxpayers polled said they never checked to see if their PAYE code is correct. 42% said they found it ‘very’ or ‘fairly’ difficult to understand if they are paying the right amount of tax.

John Cullinane adds: “The majority of people in the UK have most of their tax collected through PAYE. A December 2006 National Audit Office report indicated that HMRC estimated that last year taxpayers may have overpaid around £500 million via PAYE, and that £1 billion of tax may have been underpaid. They estimate that 5.7 million taxpayers may not be paying the right amount of tax. This is why the CIOT is bringing the issue to the public’s attention now. We agree with HMRC that it is vital for people to keep their tax records and also urge them to make sure they understand their tax code.”

For anyone struggling with their PAYE code, the CIOT recommends they first contact their local Tax Office. You should be able to find their number in the Yellow Pages.
John Cullinane suggests that: “If you need more help you should consider using a Chartered Tax Adviser (CTA) for advice. If you cannot afford to pay for the advice that you need the CIOT suggests you contact TaxAid, or in the case of older taxpayers, TaxHelp for Older People (TOP).”

John Cullinane continues: “The majority of taxpayers in Britain are in the PAYE system. Unlike companies or people who are self-employed they are not in the front line of dealing with the tax system, yet many now realise the system has become unwieldy.”

We understand that PAYE coding checking and advice is by far the biggest area of problems in which TOP are called in. 42% of calls to TOP in 2006/07 were on coding problems alone.
The CIOT continues to work with HMRC to improve the workings of the system but there are limits to what can be achieved when the tax rules HMRC have to work with are themselves too complicated. The Institute also continues to make the case for simplification in order to make the tax system work better. Unfortunately, neither is a substitute for people checking their own records – although this would be made easier if the system were simpler.

Robin Williamson, Technical Director, of the CIOT’s Low Incomes Tax Reform Group (LITRG), comments: “The work we do with people on low incomes highlights how difficult the tax system can be. People have a right to be able to understand what they are paying in tax. LITRG campaigns to ensure that the system does not disadvantage the unrepresented.”

Notes to Editors

The poll also showed that 74% of those questioned pay their taxes through their employer and 89% of people who were polled thought that the tax system should be simplified.

CommunicateResearch interviewed a random sample of 1,000 income tax payers throughout Britain online from 23 February to 1 March 2007. The sample was drawn from a nationally representative sample of British adults for which quotas were set by age, gender, region and social grade.

Useful websites:

The Chartered Institute of Taxation (CIOT) is a registered charity (number 1037771) and is the leading professional body in the United Kingdom concerned solely with taxation. The CIOT deals with all aspects of direct and indirect taxation. Its primary purpose is to promote education in and the study of the administration and practice of taxation. One of its key aims is to achieve a better, more efficient, tax system for all affected by it – taxpayers, advisers and the authorities. The CIOT’s comments and recommendations on tax issues are made solely in order to achieve its aims: it is entirely apolitical in its work. The 14,000 members of the CIOT have the practising title of ‘Chartered Tax Adviser’.

The Institute was established in 1930 and received its Royal Charter in 1994. It is a United Kingdom member of the Confédération Fiscale Européenne (CFE), the umbrella body for 150,000 tax advisers in Europe. As part of its charitable activities, the CIOT also sponsors the Low Incomes Tax Reform Group that works to improve and simplify the tax system so as to make it more responsive to the needs of those who cannot afford to pay for tax advice. The Institute offers the Advanced Diploma in International Taxation as a specialist qualification for international tax practitioners primarily working in corporate tax.

TaxAid is an independent, free tax advice service for people who cannot afford to pay a professional adviser. They can be contacted on the helpline 0845 120 3779 (open Monday – Thursday 10am to 12pm), or at

TaxHelp for Older People (TOP) is an independent, free tax advice service for older people on low incomes who cannot afford to pay for professional advice. They can be contacted on their helpline 0845 601 3321, or at TaxHelp for Older People, Pineapple Business Park, Salway Ash, Bridport, Dorset, DT6 5DB.