Three pay slip checks to make now as 27million get pay rise – and what to do if you’re owed cash
MILLIONS of households will now see some major pay rises reflected in their payslips this month.
But it’s important to check that these income boosts are funnelling through.
From the rise in the minimum to a cut in the National Insurance rates, it’s always important to check your payslips to see that you’re not being underpaid.
It’s also the right time to assess whether or not you’re paying the correct amount of tax.
You’ll be able to check this by searching for your tax code.
We’ve explained the three things you need to look out for below.
MINIMUM WAGE RISE
The minimum wage increased earlier this month, and the government is encouraging employees to check they’re being paid correctly.
Workers aged 21 and over should now earn £11.44 an hour as a minimum.
The new rates apply to everyone and are different based on your age, including whether you are in an apprenticeship role.
HMRC has urged workers to check their wages, irrespective of you being in a full-time, part-time or temporary role.
If you’re unsure about your own wage, there’s a simple government tool available at www.checkyourpay.campaign.gov.uk that you can use online to check if you’re earning what you’re entitled to.
What are the national minimum wage rates?
THE National Minimum Wage is the amount workers under 21 (but of school-leaving age) are entitled to.
The National Living Wage is paid to workers 21 and over.
Exactly what you’ll get depends on how old you are.
Here are the rates that came into force on April 1, 2024:
- Those aged 21 and over – £11.44
- For 18 to 20-year-olds – £8.60
- 16 to 17-year-olds – £6.40
- The apprentice wage – £6.40
There are two approaches you can take if you’ve discovered you’re being underpaid.
You can anonymously report the company to HMRC online.
The other option is to have an informal conversation with your boss.
NATIONAL INSURANCE CUT
The Government slashed the National Insurance (NI) contributions from 10% to 8% for UK workers earlier this month.
It is estimated the changes will affect more than 27million working people in the UK.
The average worker earning a salary of £35,400 a year will save £450 while some could see their pay boosted by as much as £754.
A number of low-income earners will not see a change as they earn £242 or £12,570 a year so won’t be paying NI.
While income tax thresholds haven’t changed, it’s important to check your tax code to make sure you’re paying the correct amount after these pay rises.
LOOK FOR YOUR TAX CODE
Tax codes on your payslip will tell you how much you should be paying to HMRC in tax every month.
Here’s our guide to what each of the letters mean:
- L – You’re entitled to the standard tax-free Personal Allowance
- M – Marriage Allowance: you’ve received a transfer of 10% of your partner’s personal allowance (£1,260)
- N – Marriage Allowance: you’ve transferred 10 per cent of your personal allowance to your partner
- S – Your income or pension is taxed using the rates in Scotland
- T – Your tax code includes other calculations to work out your personal allowance, for example, it’s been reduced because your estimated annual income is more than £100,000
- 0T – Your personal allowance (which is currently £12,570) has been used up, or you’ve started a new job and your employer doesn’t have the details they need to give you a tax code
- BR – All your income from this job or pension is taxed at the basic rate (usually used if you’ve got more than one job or pension)
- D0 – All your income from this job or pension is taxed at the higher rate (usually used if you’ve got more than one job or pension)
- D1 – All your income from this job or pension is taxed at the additional rate (usually used if you’ve got more than one job or pension)
- NT – You’re not paying any tax on this income
- Tax codes starting with K mean you have income that isn’t being taxed another way and it’s worth more than your tax-free allowance
How do I check my tax code?
YOU can check your tax code on your personal tax account online, on any payslips or on the HMRC app.
To log in, visit www.gov.uk/personal-tax-account.
If you have one, you can also check it on a “Tax Code Notice” letter from HMRC.
Bear in mind that you might need your Government Gateway ID and password to hand to log in.
But if you don’t have this you can use your National Insurance number or postcode and two of the following:
- A valid UK passport
- A UK photocard driving licence issued by the DVLA (or DVA in Northern Ireland)
- A payslip from the last three months or a P60 from your employer for the last tax year
- Details of a tax credit claim if you have made one
- Details from a self assessment tax return (in the last two years) if you made one
- Information held on your credit record if you have one (such as loans, credit cards or mortgages)
If, after checking, you think you’re on the wrong tax code, you can contact HMRC to tell them via phone on 0300 200 3300.
This is usually the quickest way to get a response.
Or, you can send a letter to the following address: Pay as You Earn and Self Assessment, HM Revenue and Customs, BX9 1AS, United Kingdom.
If you are on the wrong tax code and have been paying too much, HMRC will change it so you pay the correct amount moving forwards.
They should also reimburse any tax you’ve already overpaid on.
It’s always worth noting, you might contact HMRC about an incorrect tax code and you might have underpaid them.
In this case, you will usually have to pay the money back over 12 months.
But, only if you are earning enough income over the Personal Allowance, which is currently £12,570, and owe less than £3,000 back.
HMRC might get in touch with you to tell you you’re owed a tax rebate too – they’ll do this via a P800 letter or a simple assessment letter in the post.
But again, a P800 might tell you if you’ve not paid enough tax and have to pay it back.
A P800 letter will tell you if you can claim online through the government’s website.
If you can claim online, you’ll need your Government Gateway ID and password.
If you claim online, the money will be sent to your bank account within five days.
You can also claim your refund through the HMRC app.
If your P800 letter tells you you will be paid your tax rebate via cheque in the post, you should receive it within 14 days of the date on your letter.
If you’re owed tax from more than one year, you’ll get a single cheque for the entire amount.