Tax experts have warned state pensioners they could see a change in their tax code. It’s important to make sure you are on the right tax code or you may pay the wrong amount of tax. There are several ways you can find out what your current tax code is.

Fiona Smith, payroll training manager at The Chartered Institute of Payroll Professionals, spoke about when a person may see their tax code change. She said: “A tax code may be higher or lower because of reasons like owing tax from a previous year, or receiving income from two jobs.

“Receiving any kind of benefit can also alter your tax code, such as the state pension.” Guidance on the Government website warns that HMRC “may update your tax code” if you receive a taxable state benefit, such as the state pension, or if your weekly state pension amount changes.

However, some state pension age benefits are entirely tax-free, such as Attendance Allowance and Pension Credit. You can find out what your current tax code by logging into your personal tax accout on the Government website or through the HMRC app.

You can also find it on a recent payslip or on a tax code notice letter from HMRC if you have been sent one. Ms Smith said: “The best way to check your tax code is through the HMRC app, as this will show all the information your employer holds about you, including information on your earnings and you can check eligibility for benefits like the state pension.

“The CIPP also has an ‘understanding your payslip’ tool which explains all the different kinds of tax on a payslip, like income tax and National Insurance.”

Explaining how tax codes function, Ms Smith said: “Tax codes in the UK work whereby each individual is assigned a tax free allowance. This is the amount you earn before you start paying any income tax.

“For many people, this is the amount of £12,570. This is translated into the tax code 1257L on a payslip. Your tax code tells the person paying you, such as your employer or a payroll professional, how much your personal allowance is for the year, and how much tax you pay as a result.”

The state pension is getting close to using up the personal allowance and attracting an income tax bill. The current full new state pension pays £230.25 a week, or £11,973 a year, just £600 away from using up all the allowance.

Payment rates are expected to rise 4.8 percent next April in line with the triple lock. This will mean the full new state pension will rise to £241.30, or £12,547.60 a year, only just over £20 away from landing a tax bill.