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5 Critical HMRC Warnings For Christmas Workers: Stop Overpaying Tax And Avoid Festive Scams

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The festive season of 2025 is a prime time for temporary employment, but HM Revenue and Customs (HMRC) has issued a critical "Check Your Pay" warning to thousands of seasonal workers across the UK. This urgent advice comes as a direct response to common payroll errors and a significant rise in sophisticated tax-related scams that specifically target workers during the busiest period of the year. If you have taken on a temporary Christmas job in retail, hospitality, or logistics, understanding this warning is essential to prevent overpaying tax and to ensure you receive the full wages you are legally due.

The primary message from HMRC is simple: check your payslip immediately, not later. Common issues like incorrect tax codes and National Minimum Wage (NMW) underpayments are rife in temporary employment, meaning many seasonal staff could be losing out on hundreds of pounds. By taking proactive steps now, you can correct an emergency tax code, claim a tax refund, and protect yourself from a surge of fraudulent activity that exploits the seasonal rush.

Urgent Warning 1: The Emergency Tax Code Trap (W1/M1/X)

One of the single biggest issues HMRC sees among temporary and seasonal workers is the incorrect application of an emergency tax code. This is a critical payroll mistake that can result in you paying significantly more Income Tax than necessary, immediately reducing your take-home pay.

Why Temporary Staff Get Emergency Tax Codes

  • No P45: If you start a new Christmas job and do not provide your employer with a P45 from a previous job, your new employer must use an emergency tax code.
  • Multiple Jobs: If you are working a second job alongside your main employment, the new employer may incorrectly place you on an emergency code.
  • System Errors: In the rush of seasonal hiring, employers may incorrectly input your details or apply a default code to get you onto the payroll system quickly.

How to Spot and Fix an Emergency Tax Code

You are on an emergency tax code if the code on your payslip ends in 'W1', 'M1', or 'X'. For example, a common emergency code is 1257L W1 or 1257L M1 (based on the current personal allowance). This code means your tax is calculated based on what you earn in the current pay period only, without factoring in your tax-free personal allowance for the full year, leading to excessive deductions.

Actionable Fix:

  1. Contact HMRC: The fastest way to correct the issue is to contact HMRC directly. You will need your National Insurance number, your employer's PAYE reference number (found on your payslip), and your P45 (if you have one).
  2. Use the Personal Tax Account: Log in to your HMRC Personal Tax Account via GOV.UK. You can check your current tax code and update your employment details online.
  3. Provide a P45: If you have recently left another job, ensure you give your P45 to your new Christmas employer. If you don't have one, your employer will ask you to complete a Starter Checklist.

If you have overpaid tax due to an emergency code, HMRC will automatically issue a tax refund once your code is corrected, or you can claim it back after the tax year ends.

Urgent Warning 2: National Minimum Wage (NMW) and Underpayment

HMRC's "Check Your Pay" campaign is not just about tax; it’s also a vital reminder to check your hourly wage to ensure it meets the legally required National Minimum Wage (NMW) or National Living Wage (NLW) rates, which vary by age. Seasonal underpayment is a common issue, often caused by unpaid hours or illegal deductions.

The two most common causes of minimum wage underpayment are:

  • Unpaid Working Time: This includes time spent on tasks like security checks, handover periods, or mandatory training that is not included in your paid hours.
  • Illegal Deductions: Deductions for things like uniforms, tools, or till shortages that bring your average hourly pay below the NMW/NLW threshold are illegal.

Actionable Fix:

Check your payslip to see your gross pay and the number of hours worked. Divide your gross pay by your hours to get your actual hourly rate. If it is below the current NMW/NLW for your age, you should first raise the issue with your employer. If the issue is not resolved, you can report your employer to HMRC confidentially on the GOV.UK website.

Urgent Warning 3: The Surge in Fake Tax Refund Scams (2025 Data)

The festive season coincides with a peak in fraudulent activity, as scammers exploit the financial stress and distraction of the holidays. HMRC has issued a severe warning about a surge in phishing scams, particularly those offering fake tax refunds.

Recent data is alarming: Over 170,000 scam incidents were reported to HMRC in the 12 months leading up to July 2025, with a staggering 47,000 of those reports involving fake tax refund claims. Seasonal workers, especially younger staff, are often targeted because they are less familiar with PAYE and tax processes.

How to Spot a Fake HMRC Scam

Scammers typically impersonate HMRC via email, text message (SMS), or phone calls.

  • Fake Tax Rebate/Refund: The most common scam is an email or text claiming you are due a tax rebate and asking you to click a link to provide bank details. HMRC will never ask for bank details via text or email.
  • Threatening Demand: A phone call or email threatening immediate arrest, legal action, or a fine if you do not pay an overdue tax bill immediately. HMRC will never use threatening language or demand immediate payment over the phone.
  • Phishing Emails: Look for poor grammar, a generic greeting (e.g., "Dear Customer" instead of your name), and a sender email address that does not end in @hmrc.gov.uk.

Actionable Fix:

If you receive a suspicious email, forward it to phishing@hmrc.gov.uk. If you receive a suspicious text message, forward it to 60599. Then, delete the message immediately. If you are unsure, always check the official guidance on the GOV.UK website.

Urgent Warning 4: The Problem with Multiple Jobs and Tax Overpayment

Many Christmas workers take on a second temporary job to boost their income for the holidays. While this is a smart financial move, it significantly increases the risk of paying too much tax.

When you start a second job, your primary tax code (e.g., 1257L) should only be used by your main employer. Your second employer should use a different tax code, often a 'BR' (Basic Rate) code, which deducts tax at the basic rate from all earnings in that job. If your second employer incorrectly uses your main tax code, you are effectively using your tax-free Personal Allowance twice, which will result in an underpayment of tax that you will have to pay back later.

Actionable Fix:

Ensure that both employers have the correct details. If you notice your second job is using the same tax code as your first, contact HMRC to have your tax codes split correctly. This ensures you pay the right amount of tax throughout the year, avoiding a large unexpected tax bill when the new tax year begins.

Urgent Warning 5: Keeping Your P60 and P45 Documents Safe

For seasonal work, the paperwork is often overlooked, but your documents are crucial for correcting tax errors and claiming any tax refund. Your P45 and P60 are essential entities in the PAYE system.

  • P45: You receive a P45 when you leave a job. It shows your tax code, pay, and tax paid up to the date you left. You must give this to your next employer to ensure they use the correct tax code and avoid the emergency tax trap.
  • P60: You receive a P60 from your employer at the end of the tax year (April 5th). It summarises your total pay and tax deducted for the entire year. This document is essential if you need to claim a tax refund, correct an error, or prove your income.

Ensure you keep your final payslip and P45 from your temporary Christmas job safe. If you have been placed on an emergency tax code, you may need to use these documents to claim a refund after the tax year ends.

Summary of Key Entities and Action Points

The HMRC warning to all Christmas workers in 2025 is a dual-focus alert: check your pay for underpayment and check your communications for scams. The high volume of temporary staff means payroll errors are common, and the festive period is a peak time for fraud. By focusing on these critical areas, seasonal staff can secure their full earnings and protect their personal data.

Checklist for Seasonal Staff:

  1. Payslip Check: Verify your hourly rate is at or above the National Minimum Wage (NMW) or National Living Wage (NLW).
  2. Tax Code Check: Look for 'W1', 'M1', or 'X' on your payslip. If you see one, contact HMRC immediately to fix the Emergency Tax Code.
  3. Document Handover: Always provide your P45 to a new employer to avoid default tax codes.
  4. Scam Vigilance: Never click a link in a text or email offering a Tax Refund. HMRC does not operate this way.
  5. Record Keeping: Keep your final Payslip and P45 safe for any future Tax Refund claim.

For official guidance and to use the 'Check Your Pay' tools, always visit the official GOV.UK website. This proactive approach will ensure your hard-earned Christmas income is protected from both payroll mistakes and cybercriminals.

5 Critical HMRC Warnings for Christmas Workers: Stop Overpaying Tax and Avoid Festive Scams
hmrc warning to christmas workers
hmrc warning to christmas workers

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