What is a Tax Code?

Tax Code
Your tax code tells your employer or pension provider how much tax to take from your income. HMRC determines your tax code depending on your wage and circumstances.

Employers and pension providers deduct income tax from your earnings and pay it to HMRC on your behalf. In order to make sure you pay the correct amount of tax, HMRC works out your tax code and sends it to your employer or pension provider.

Your tax code does not contain details of your income, it just tells your income provider how much tax to withhold. HMRC works out your tax code depending on how much you can earn tax-free, and your personal situation.

The numbers on your tax code relate to your tax-free income. The letter(s) relate to your circumstances, e.g. whether you are entitled to the standard tax-free Personal Allowance (L), the Marriage Allowance (M) or the Basic (BR) or Higher Rate (D0).

You can find your tax code on pay slips from your employer, your P45 or your P60. If you have more than one employer you may have more than one tax code.

Tax codes usually change at the beginning of every tax year. This is because the Personal Allowance changes each year. However your tax code can change at any time, for example because you change jobs or start to receive a State benefit.

If there is a change in your circumstances you, your employer or your pension provider should inform HMRC. They will then issue you with a new tax code.

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