Millions of workers across Britain could be owed money without even realising it.
Tax experts are warning that simple errors may have cost people hundreds, or even thousands of pounds.
Around 5.6 million workers paid too much income tax during the 2023-24 tax year, with total overpayments estimated at £3.5 billion.
These errors are often caused by incorrect tax codes used in the Pay As You Earn system. This has led to calls for employees to check their payslips carefully.
Tax codes decide how much tax is taken from one's salary each month, so even small mistakes can mean workers pay more than they should over time.
Nearly a third of freelancers say dealing with HMRC has negatively affected their business, showing how widespread the issue is.
Lee Murphy, Managing Director of The Accountancy Partnership, outlined several factors that frequently trigger these costly mistakes.
"There are all sorts of reasons that can cause your tax code to be wrong, but it's something you're going to want to sort out straight away so you're not out of pocket," Mr Murphy said.
Millions of workers overpaying tax
| GETTYSwitching employers within the past twelve months or earning money from multiple sources are particularly common culprits.
Workplace perks present another pitfall, with company vehicles and private medical cover sometimes logged inaccurately in HMRC records.
"HMRC is likely going to estimate your income based on whatever income they have on file for you, which could be outdated," Mr Murphy explained.
The automatic nature of PAYE deductions lulls many employees into assuming their tax contributions are accurate.
When personal details remain unrefreshed, mistakes can persist undetected for months or even years
| GETTYHowever, this confidence is often misplaced, as the revenue authority depends heavily on data supplied by employers and the workers themselves.
"Many people assume that because tax is deducted automatically through PAYE, the amount must be correct, but tax codes are based on the information HMRC has about your circumstances, and if that information is outdated or incorrect, you could end up paying too much tax without realising it," Mr Murphy warned.
When personal details remain unrefreshed, mistakes can persist undetected for months or even years.
The problem frequently escapes notice because discrepancies appear on payslips rather than arriving as separate tax demands.
Verifying a tax code takes just minutes and could prevent substantial financial losses, according to Mr Murphy.
Workers can also access the HMRC app to confirm their details are current
| GETTY"Your tax code appears on your payslip, P60, and in your HMRC online account. If something doesn't look right, it's worth checking with HMRC or your employer to make sure the information they're using is accurate," he advised.
Workers can also access the HMRC app to confirm their details are current.
"Even a small tax code error can add up over time," Murphy noted. "Taking a moment to check your tax code when you start a new job, receive a pay rise or change circumstances can help ensure you're paying the correct amount of tax."
Should any discrepancy emerge, HMRC can amend the code and modify subsequent payroll deductions accordingly.