how do i found out about tax codes?

Answer 1

hi

it depends on what you need to find out about your tax code as some of it will be explainable over the net and other aspects you'll need to call the inland revenue for.

the purpose of tax codes are so your employer or pension provider can calculate the amount of tax to deduct from your pay or pension.

If you have the wrong tax code you could end up paying too much or too little tax.

there are quite a few tax codes:
L - is used if you are eligible for the basic personal allowance.

P - is used if you are aged 65 to 74 and eligible for the full personal allowance.

K - is used when your total allowances are less than your total 'deductions'

V - is used if you are aged 65 to 74, eligible for the full personal allowance and the full married couple's allowance (for those born before 6 April 1935 and aged under 75) and estimated to be liable at the basic rate of tax.

Y - is used if you are aged 75 or over and eligible for the full personal allowance.

T - is used if there are any other items HM Revenue & Customs (HMRC) needs to review in your tax code, or if you ask HMRC not to use any of the other tax code letters listed above.

BR - is used when all your income is taxed at the basic rate - currently 22 per cent (most commonly used for a second job).

D0 - is used when all your income is taxed at the higher rate of tax - currently 40 per cent (most commonly used for a second job),

NT - is used when no tax is to be taken from your income or pension

How tax codes are worked out
Step one
Your tax allowances are added up (in most cases this will just be your personal allowance and any blind person's allowance, in some cases it may include certain job expenses).

Step two
Income you've not paid tax on (for example untaxed interest or part-time earnings) and any taxable employment benefits are added up.

Step three
The total amount of income you've not paid any tax on (called 'deductions') is taken away from the total amount of tax allowances. The amount you are left with is the total of tax-free income you are allowed in a year.

Step four
To arrive at your tax code the amount of tax-free income you are left with is divided by 10 and added to the letter which fits your circumstances.

Example:

The tax code 117L means:

you are entitled to the basic personal allowance
£1,170 must be taken away from your total taxable income.

How the 'K code' works
If your deductions (untaxed income on which tax is still due) are more than your allowances you'll be given a K code, to ensure you pay tax on the excess.

The excess tax due is divided by 10 and added to the letter K. So, whereas with other tax codes the number indicates the amount of income you can have tax-free, the number in a K code indicates how much must be added to your taxable income.

K code example
K497 means:

your untaxed income was £4,970 greater than your tax-free allowances
as a result, £4,970 must be added to your total taxable income to ensure the right amount of tax is collected.

Where to find your tax code
If you're employed or between jobs
Your tax code is written on your P45 (given to you by your employer when you stop working for them). This is why it's very important to give this to your new employer when you change jobs.

If you've lost your P45 and want to find out your tax code contact your tax office and give them your National Insurance number and tax reference number.

If you're starting your first job
If you're starting your first job and don't have a P45, your employer will give you a P46 to fill in and sign. Your employer will allocate a tax code and work out the tax due. We will process your P46 and, where necessary, revise your tax code.

If you've paid too much tax, your employer will make the necessary repayment. (If the tax year has ended before this is worked out, then we will make the repayment.) If you haven't paid enough tax your tax code can be amended to collect the underpaid tax.

If you get a company or personal pension
You'll find your tax code on your 'notice of coding' sent to you by your tax office after the start of each tax year (and at other times if your tax code changes). You'll also find your tax code on notices and payslips from you pension provider.

Contact details for all tax offices
Changes that might affect your tax code
You must keep us informed of any change in your circumstances, for example if:

you get married, form a civil partnership or separate and either of you was born before 6 April 1935
you start to receive a second income
the amount of untaxed income you get increases or reduces.
If you do not do this you could end up paying the wrong amount of tax.

If we change your tax code, you should receive a ‘notice of coding’ from your tax office. Keep all notice of coding letters for reference in case you have any questions or need to check you are paying the right level of tax.

the link below is to locate you local tax office if you have more queries

Answer 2

It depends on what you want to know. You can go on to hmrc.gov.uk and search for a booklet P3, which is a standard leaflet which accompanies the P2 notices of coding which go out to employees. It explains the basic allowances and reliefs etc.

In a nutshell, the standard tax free allowance for the current 2006/07 year (6 April 2006 - 5 April 2007) is £5035, becoming £5225 in 2007/08 for anyone up to the age of 65. From then it is £7090 2006/07 and £7280 2007/08 to the age of 75 when it is uprated again (but I can't remember what to)

A standard tax code for 2006/07 and 2007/08 assuming you are under 65 should be 503L and 522L respectively. Make sure it's on your payslip (benefits/expenses pending)

Answer 3

Try the inland revenue website www.hmrc.gov.uk and search for tax codes.

Answer 4

Hi this site gives you all you need to know about tax codes and what yours should be

http://www.hmrc.gov.uk/pensioners/tmatax-codes.shtml

Answer 5

See a tax consultant; or, seek info online from the federal or local (whichever is appropriate) gov.com

Answer 6

Ring your local tax office, they are very helpful and will explain everything fully.

Answer 7

ask your accountant