Most people don't spend a lot of time worrying about their tax code. It's just a string of digits and letters they occasionally spot on a payslip or P45. It's “someone else's problem” and that's fine – at least until it starts costing you money.

The thing is,tax codes can actually give you a pretty decent snapshot of how the taxman sees you. It tells him how much he can carve off your wages before you get them, and picks out a few key details about you. What's important to note, though, is that it might not be giving him a full and accurate picture. It's definitely worth getting to know what your code's all about, particularly if you notice it changing unexpectedly. A simple error in the code could easily see you losing a lot of money unnecessarily. Here's what you need to do:

Find your code

You should be able to do this pretty easily from a payslip, P45 or P60. If you're really stuck, HMRC can let you know what code you're on. Keep in mind that you might have more than one code to keep track of – if you've got two jobs, for instance.

Understand your code

The numbers in your tax code will generally refer to your tax-free Personal Allowance. You have to add a zero on the end to get the actual amount you can earn before paying tax. For example, most people will see the digits 1185 in their code. That means they can earn £11,850 before the taxman comes knocking.

Assuming there are no other special circumstances, those digits will usually be followed by an L. That just means you're on the standard Personal Allowance. Other common codes include:

•    M     You're married, and 10% of your partner’s Personal Allowance was transferred to you.
•    N     You're married, and transferred 10% of your Personal Allowance to your spouse.
•    T     Your tax code includes other calculations to work out your Personal Allowance.
•    0T     Your Personal Allowance has been used up, you don’t have a P45 or your new employer     doesn't have enough information to work out your tax code.
•    BR     All your income from this job or pension is taxed at the basic rate (if this is your     second job, for instance).
•    D0     All your income from this job or pension is taxed at the higher rate.
•    D1     All your income from this job or pension is taxed at the additional rate.
•    NT     You don't pay tax on this income.

Fix it if it's wrong

This is the tricky part. There are quite a few ways that HMRC might have got its homework wrong. You might have stopped work or had a change of circumstances over the tax year, for example. If you've got more than one job, you might find that the wrong one's got your Personal Allowance attached to it. If your “main job” pays less than your Personal Allowance, you're not getting the full benefit of it. Working out if your code's wrong isn't always that easy, though. You need to know if there are any deductions that apply to your Personal Allowance, for one thing. This can mean anything from taxable employment benefits to extra income.

Once you're deciphered and checked your code, HMRC says it's your responsibility to get it fixed. If you've paid too much, you can contact them and kick up a fuss. If you've paid too little, you'll need to pay up what you owe - even if it wasn't your mistake.

Recently there was an issue with HMRC's Dynamic Coding System which meant a lot of people ended up on the wrong code and either paid too much or too little for the year. Luckily, as soon as we spotted this for our customers we were able to contact HMRC to let them know of the problem and get it fixed right away, no hassle and no charge, but you should double check your own code now and make sure you haven't been paying the wrong amount of tax.

The good news is that working with RIFT means you never have to get your hands dirty with stuff like this. Tax code errors are the most common way that people end up paying too much or too little tax. They're a regular issue that we handle at RIFT, and we've got the expertise to do it right. Better yet, there's no extra charge for this. It's all part of the service when you've got RIFT on your team.

Get in touch if you've got questions about your tax code, need help getting it fixed or need to claim a tax rebate? We'll sort it.  We're also tax return experts too. Having been in the industry since 1999 we're experts in this field and know what we're talking about.