Martin Lewis says common tax code error can cost you thousands

Martin Lewis has warned that millions of people may be losing money on the wrong tax code – and it’s a complicated business trying to find out if you’re on the right one.

In a grave warning on The Martin Lewis Money Show, the expert said: "This is really important right now because they are sending millions of new tax codes out in February and March for the new tax code that starts on April 6.

"What you really need to understand is that it is not your employer’s responsibility, it’s not your tax officer’s responsibility, it’s your legal responsibility to check your tax code is correct."

Co-host Angellica Bell asks: “How many wrong?”

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“Millions each year, and it can be a nightmare,“ the MoneySavingExpert founder replies.

He added: “If you’re underpaying you can find in a couple of years that you’re suddenly hit with a bill for thousands of pounds that you’ve spent.

“If you’re overpaying you’re not getting the take-home pay that you should.”

Unfortunately, finding out which tax code you should be on can be a headache in itself but there are tools online to help.

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Martin says: “It isn’t easy to be honest. The standard tax code this year is 125OL but you shouldn’t be on that if you have a company car or have company benefits or have a pension coming in or a second job.

“There are free tools online that can help you understand if your tax code is right that really really is worth checking.”

He said that one woman got in touch after checking his guidance and told him she’d got back a hefty £2,240 from the tax office after discovering she had been overpaying.

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