Can you help me understand my tax code?

GrubbyGirl_2

Like many others I have received a tax code change relating to underpaid tax on interest.  Can I check my understanding of how this works?

1. My tax code for 2025/26 starts the year assuming I will earn the same interest as the actual interest I earned in 2023/24

2. This time of year HMRC have received all of the notifications from the banks as to what I actually got in interest in 2024/25 so they then issue a new code for 2025/26 to recover the underpaid tax by 31/03/26

3. Early in 2026 I will get my 2026/27 tax code and this will be based on the interest I actually earned in 2024/25 and it will again be revised later in the year to reflect what I actually earned in 2025/26 

I am expecting to earn more interest this year than last year so I will get another unpaid tax notice next December.  So, a question.........If I go onto my tax account around June time when I have received all of my tax statements from 2025/26 I can update my income from investments so I get the code change 6 months earlier so it's more spread out?  Is it clear when you are filling it in as to what year you are correcting?

I will actually be contacting HMRC anyway as I actually earned less interest last year than the previous year and the amount it has gone up is pretty much the same as what I earned from my Zopa ISA in 2024/25 so I think I may be a victim of Zopa's ISA !!!!!!-up.  I just want to get my head clear so I understand what I'm talking about when I contact them, plus I get my state pension next year so that will also pretty much wipe out my tax code so I want to make sure I understand everything!

Thanks in advance

Dazed_and_C0nfused

GrubbyGirl_2 said:

Like many others I have received a tax code change relating to underpaid tax on interest.  Can I check my understanding of how this works?

1. My tax code for 2025/26 starts the year assuming I will earn the same interest as the actual interest I earned in 2023/24

2. This time of year HMRC have received all of the notifications from the banks as to what I actually got in interest in 2024/25 so they then issue a new code for 2025/26 to recover the underpaid tax by 31/03/26

3. Early in 2026 I will get my 2026/27 tax code and this will be based on the interest I actually earned in 2024/25 and it will again be revised later in the year to reflect what I actually earned in 2025/26 

I am expecting to earn more interest this year than last year so I will get another unpaid tax notice next December.  So, a question.........If I go onto my tax account around June time when I have received all of my tax statements from 2025/26 I can update my income from investments so I get the code change 6 months earlier so it's more spread out?  Is it clear when you are filling it in as to what year you are correcting?

I will actually be contacting HMRC anyway as I actually earned less interest last year than the previous year and the amount it has gone up is pretty much the same as what I earned from my Zopa ISA in 2024/25 so I think I may be a victim of Zopa's ISA !!!!!!-up.  I just want to get my head clear so I understand what I'm talking about when I contact them, plus I get my state pension next year so that will also pretty much wipe out my tax code so I want to make sure I understand everything!

Thanks in advance

1.  Normally yes.

2.  Normally yes, but only estimated underpaid tax for 2025/26.  And it's no different if you are paid earnings/pension in the period 1-5 April 2026, a new tax code issued now would still be used on those 5 days.

3.  Yes.  The final position for 2025/26 will also be checked.

Yes, it is clear which tax year, when you provide new information online.

GrubbyGirl_2

Dazed_and_C0nfused said:

GrubbyGirl_2 said:

Like many others I have received a tax code change relating to underpaid tax on interest.  Can I check my understanding of how this works?

1. My tax code for 2025/26 starts the year assuming I will earn the same interest as the actual interest I earned in 2023/24

2. This time of year HMRC have received all of the notifications from the banks as to what I actually got in interest in 2024/25 so they then issue a new code for 2025/26 to recover the underpaid tax by 31/03/26

3. Early in 2026 I will get my 2026/27 tax code and this will be based on the interest I actually earned in 2024/25 and it will again be revised later in the year to reflect what I actually earned in 2025/26 

I am expecting to earn more interest this year than last year so I will get another unpaid tax notice next December.  So, a question.........If I go onto my tax account around June time when I have received all of my tax statements from 2025/26 I can update my income from investments so I get the code change 6 months earlier so it's more spread out?  Is it clear when you are filling it in as to what year you are correcting?

I will actually be contacting HMRC anyway as I actually earned less interest last year than the previous year and the amount it has gone up is pretty much the same as what I earned from my Zopa ISA in 2024/25 so I think I may be a victim of Zopa's ISA !!!!!!-up.  I just want to get my head clear so I understand what I'm talking about when I contact them, plus I get my state pension next year so that will also pretty much wipe out my tax code so I want to make sure I understand everything!

Thanks in advance

1.  Normally yes.

2.  Normally yes, but only estimated underpaid tax for 2025/26.  And it's no different if you are paid earnings/pension in the period 1-5 April 2026, a new tax code issued now would still be used on those 5 days.

3.  Yes.  The final position for 2025/26 will also be checked.

Yes, it is clear which tax year, when you provide new information online.

Thank you that's helpful