The tax code, if correctly issued by HMRC, enables your employer or pension provider to collect the correct amount of tax in the year. If it is wrong, HMRC will issue a tax calculation at the end of the tax year. To check your tax code is correct, you need to know what it is. It should be on your payslip, or you can call HMRC and ask. You can also find your PAYE code online by accessing your Personal Tax Account: www.gov.uk/personal-tax-account. It is your responsibility to check your code and contact HMRC if you think it is wrong.
Check you understand the numbers in each line of the letter and the HMRC notes on the back. The names of all the employers or pension providers who pay you should be listed at the bottom. The code will also list the tax free amount you are entitled to, less any adjustments.
This is the amount of tax free allowances you are entitled to less any deductions. Check that all the allowances you are entitled to are given:
Some deductions and adjustments you may have:
The total of the allowances, less deductions and adjustments, usually leaves a figure of unused allowances, which is converted into a code by removing the last digit and adding a letter.eg allowances of £12,500 become a code of 1250L.The letters at the end of the tax code are explained below:
L Entitlement to the personal tax free allowance
M 10% of your spouse’s Personal Allowance has been transferred to you (Marriage Allowance rules)
N 10% of your Personal Allowance has been transferred to your spouse (Marriage Allowance rules)
T HMRC will review the code
X HMRC will review tax paid at the end of the tax year
K Negative tax free allowance, which means no net tax free allowance is due, but rather tax is due on the excess of adjustments over allowances
C Resident in Wales (different tax bands)
S Resident in Scotland (different tax bands)
BR Income taxed at basic rate, 20%
NT No tax to pay on this income
DO Income taxed at higher rate, 40%
If you have any doubts about your code, contact either HMRC on 0300 200 3300 or, if on a low income, Tax Help for Older People, helpline number 01308 488066.
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