Royal London warned that people falling into this category should be non-taxpayers because their total income is below the personal allowance.

Its analysts estimated that hundreds of thousands of people receiving company and personal pensions need to be checking their tax code to make sure that they are not being over-taxed.

This may be a particular issue for those who have multiple sources of taxable income such as a wage and a pension or multiple pensions, the company stated. In some cases, the over-taxation could have been going on for many years, it estimated.

 The guide’s author, Royal London Director of Policy, Steve Webb said: “Most people are understandably baffled by the whole system of tax codes. Employers and pension providers are issued with tax codes by HM Revenue and Customs and we generally assume they must be right.

“But HMRC can get things wrong and it is important that individuals understand their tax code and know how to spot mistakes and get things put right. Although computerisation of tax records is designed to help improve things, I have no doubt that there are many people still paying the wrong amount of tax who should check their tax code as a matter of urgency”.

Paddy Millard, founder of the charity ‘Tax Help for Older People’, said: “Tax codes are probably one of the biggest single causes of confusion and problems amongst the people who contact us via our helpline. People should not simply assume that HMRC have got things right, but should check to make sure that they are paying the right amount of tax”.

Royal London today published a new ‘good with your money’ guide to help individuals make sense of their tax code.