Money saving expert Martin Lewis has issued an urgent public warning as the new tax year begins, revealing that millions of UK workers and pensioners are likely paying more income tax than they owe, with most completely unaware of the error.
Scale of the Problem is Staggering
Writing as part of his essential guidance for April, Lewis emphasised that checking your tax code is a personal responsibility that cannot be delegated. "Millions of codes are wrong each year, so it's crucial to check yours — it's your responsibility, not your employer's, not HMRC's," he stated firmly.
On his BBC Sounds podcast, Lewis delivered a stark reminder: "Do not assume that because it's coming from HMRC that it is right. Millions — and that is not an exaggeration, it's a literal fact — millions are wrong every year."
Billions in Overpayments Documented
The magnitude of this issue is supported by hard data. According to a Freedom of Information request from accountancy firm UHY Hacker Young, a staggering 5.6 million people overpaid a combined £3.5 billion in income tax during the most recent tax year. The average overpayment stood at approximately £689 per person.
Additional FOI data from MoneySavingExpert shows that HMRC repaid around £3 billion to 4.2 million people who had overpaid in the 2024/25 tax year alone. However, a critical point remains: HMRC is under no legal obligation to proactively notify individuals of overpayments or to issue refunds automatically.
Understanding Your Tax Code
A tax code is the series of numbers and letters on your payslip that instructs your employer or pension provider how much income tax to deduct. For the 2026/27 tax year, the most common code is 1257L, which corresponds to the standard £12,570 personal allowance.
If your code appears different and you are uncertain why, it is imperative to investigate. Errors most frequently occur following significant life changes. Lewis has highlighted the primary triggers: starting a new job without a P45, the cessation of workplace benefits like a company car, managing multiple income streams, or beginning to draw a pension. In these scenarios, HMRC may be operating with outdated information.
How to Reclaim What You Are Owed
The positive news is that overpaid tax can be reclaimed. HMRC permits claims to be backdated for up to four years, meaning anyone who suspects they have been on an incorrect code could potentially recover a substantial sum of money.
The fastest method to check your status and submit a claim is through the official HMRC app or your personal tax account on gov.uk. Additionally, MoneySavingExpert provides a free tax code calculator on its website to assist with preliminary checks.
Expert Commentary and Timing
Stefani Williams, a Partner at financial advisers Holden & Partners, confirms this is a regular occurrence. "Tax codes can change after events such as a job move, starting to draw a pension, or receiving workplace benefits. It's something that's easy to overlook," she explains. "The common theme is that these things don't usually correct themselves automatically. Taking a little time to review your position can make a significant financial difference."
Lewis's warning is particularly timely. The 2026/27 tax year commenced on 6 April, meaning identifying an error now — rather than at the year's end — minimises the amount of tax overpaid and accelerates any subsequent refund process. Proactive verification is the key to ensuring you are not among the millions unnecessarily out of pocket.
