The Inland Revenue has recently come in the firing line for sending out the wrong tax codes to employees. If you have changed jobs or had an extra payment this tax year you may be classed as having had a pay rise even if that was actually a one-off payment. You could therefore be paying way too much extra tax.
What does the code mean? The number that shows how much money you can earn before paying tax and the letter that shows your tax status. For example 647L means you are a straightforward basic rate taxpayer.
Where can I find it? It will be on your pay slip, PAYE Coding Notice, form P60 (year end) or form P45 - you get this when you leave a job.
Check the Inland Revenue’s website (www.hmrc.gov.uk/incometax/codes-basics.htm) to understand the different letters and numbers that make up your tax code.
What if I have lost my P45? Your employer will have to use an emergency code and if you have paid too much tax under the emergency code, you will get a refund. If you want to find out your tax code then contact your Tax Office and give them your National Insurance number and tax reference number.
What information do I need to supply to the Revenue? If you start to receive a second (or third or more) income or the amount of untaxed income you get increases or reduces.
Contact the Tax Office which deals with your tax affairs – you will find the number at the top of your tax form.
What about taxable perks? Some company ‘benefits’ or perks - such as medical insurance or a car – are taxable and are usually included in your tax code via PAYE. If you start receiving these perks it is better to tell the Tax Office straight away so that the extra tax can be collected monthly.
Otherwise the Revenue will only know at the end of the tax year when they are notified by your employer and you will end up with a big one-off tax bill.
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