Martin Lewis has issued an urgent warning to UK workers and pensioners, stating that millions are likely paying more income tax than they owe due to incorrect tax codes. The money-saving expert emphasised that it is the individual's responsibility to check their code, not the employer's or HMRC's, and cautioned against assuming HMRC's codes are always correct.
According to a Freedom of Information request by accountancy firm UHY Hacker Young, 5.6 million people overpaid a combined £3.5 billion in income tax in the most recent tax year, with the average overpayment standing at around £689. Separate FOI data from MoneySavingExpert revealed that HMRC paid back approximately £3 billion to 4.2 million people who had overpaid in the 2024/25 tax year alone. Crucially, HMRC is under no legal obligation to notify individuals of overpayments or issue automatic refunds.
A tax code, typically a series of numbers and letters on a payslip, tells employers or pension providers how much tax to deduct. The most common code for the 2026/27 tax year is 1257L, reflecting the standard £12,570 personal allowance. Errors often occur after life changes such as starting a new job without a P45, ending workplace benefits like company cars, having multiple income sources, or beginning to draw a pension—where HMRC may rely on outdated information.
Stefani Williams, Partner at financial advisers Holden & Partners, noted that tax code errors are common and often overlooked. 'The common theme is that these things don't usually correct themselves automatically. Taking a little time to review your position can make a difference,' she said.
The good news is that overpaid tax can be reclaimed, with HMRC allowing claims backdated for up to four years. The quickest way to check and claim is through the HMRC app or personal tax account at gov.uk. MoneySavingExpert also offers a free tax code calculator. With the 2026/27 tax year starting on 6 April, catching an error early limits overpayment and speeds up refunds.
