Pictured: Sarah Moss

PKF Accountants & business advisers is warning all employees and pensioners to check their tax codes for the forthcoming tax year as soon as they receive them. Over the next three months, tax codes for the 2012/13 tax year will land on millions of doormats across the country but most will have been automatically generated by HMRC's computer systems and will not have been checked manually by tax officers - potentially resulting in significant numbers of taxpayers either under- or overpaying tax.

Sarah Moss, Tax Partner at PKF's Birmingham office, says: "HMRC has had problems getting its National Insurance and PAYE Service (NPS) system working smoothly, leading to millions of taxpayers either under- or overpaying tax in the past few years. It has admitted that it will not 'fully stabilise' the system until 2013 so, if you want to be sure there are no problems with your tax, it is best to check your coding notice or ask an expert for help."

Sarah says that there are many areas where things can go wrong:

"If you have changed jobs, have more than one job or have started drawing a pension, it is vital to check that the tax code applied to each is correct. HMRC's system should ensure that you only get one personal allowance (£8,105 for 2012/13) even if you have tax codes for several jobs or pensions. But if there has been a mistake and it is given twice, you will start building up a tax bill of £135 a month from April. Worse still, perhaps, the allowance may not be reflected in any of your tax codes causing you to pay too much tax each month.

"If your annual income is over £100,000, your personal tax allowance starts to be withdrawn (by £1 for every £2 of income) and, in 2012/13, will be lost completely if your annual income exceeds £116,210. HMRC had trouble reflecting this complex rule in tax codes when it was first introduced in 2010/11, but the teething problems should now have been ironed out and the system should automatically remove the allowances. Of course, if things have changed - perhaps because bonuses have been scaled back - and your income for 2012/13 will be less than £100,000, you should tell HMRC and ask for the allowance to be put back into your tax code.

"The system is now supposed to account for benefits in kind provided by your employer so the details for 2010/11 should have been captured and 'auto-coded' into your tax code for 2012/13. In many cases this will collect roughly the right amount of tax on your benefits in kind, but your circumstances may well have changed since April 2011 and HMRC may not know.

"With the basic rate tax band shrinking in recent years, many more of us are now higher rate taxpayers and can claim higher rate tax relief on gift aid payments and personal pension contributions. So you should make sure that your tax code shows the additional tax relief you are entitled to. Equally, there could be problems if you have scaled back your charitable giving or pension contributions. The higher rate relief that is shown in your tax code is estimated using past payments so it may now be too generous and cause you to build up a tax underpayment that will have to be paid off in due course.

"If tax on your investment income is collected through your tax code, HMRC is likely to estimate your bill based on the experience of the past few years. With interest rates falling, it is likely that such investment income will be lower in 2012/13 so check that the estimates that HMRC has used in its calculations look reasonable.

"Once payroll reporting switches to 'real time information' in October 2013 - basically monthly reporting to HMRC by employers and pension providers - many changes should be identified earlier. But, even then, you will still need to tell HMRC about personal changes not linked to your employer to make sure that your tax code can be kept up to date and that nasty shocks are avoided."