Tax Codes
Coding Notices
Employers use tax codes so that they know to deduct the right amount
of tax from a person's salary. It is up to employees to notice and
tell the Inland Revenue if they think the code is wrong. Individuals
must check as soon as possible that the coding notice given to them
is correct by ensuring it reflects their circumstances at that
time. If a person is given the wrong tax code, they will pay
the incorrect amount of tax - either too much or too little.
If someone believes their code is wrong, they should inform their
Inland Revenue office immediately. When doing so, their tax reference
and National Insurance number will be asked for, both of which are
shown on their coding notice. People need to tell the Inland Revenue
what circumstances have changed, in order to affect their tax code.
Some situations include getting married/divorced or receiving a
pension.
If you have any problems understanding coding notices or have difficulty
in getting your tax code changed, call Academy Accounting Ltd today
and we can help.
Understanding Tax Codes
Tax codes are purely alphanumeric and if it is a number followed
by a letter, the number is used to work out tax due and the letter
shows how it is adjusted following changes made by the Chancellor.
The different letters mean different things, as shown in the following
table.
| K: |
Those with total allowances in their code less than total
deductions to be taken away from their allowances |
| L: |
Tax code with basic personal allowance |
| P: |
Tax code with full personal allowance (those aged between
65 and 74) |
| T: |
Those with any other items needed to be reviewed in a tax
code or if they have asked us not to use any of the other tax
code letters listed here |
| V: |
Tax code with full personal allowance (those aged between
65 and 74) plus full married allowance for those born before
6th April 1935 and aged under 75 |
| Y: |
Tax code with full personal allowance (those aged 75 or over) |
|
