Why would HMRC send my employer the wrong tax code?

There are two main reasons.

  1. HMRC could have made a mistake – they rely on information they’re given by third parties and this isn’t always up to date. Even with their new computer system, errors are still occurring. They might issue your employer with several tax coding notices during a year and any one of these could have been wrong.
  2. You weren’t aware there were tax allowances you could use to reduce the tax you paid. If you weren’t aware of these allowances, then you never asked HMRC to include them in your tax code.

Fortunately, HMRC gives you up to 4 years to find and correct any mistakes and get your money back. After that, they get to keep your money – irrespective of how much they owe you!