Check your 2023/24 tax code

New code or not?

If you pay tax through PAYE on your salary or private pension your employer or pension company will use your code number to work out the tax it deducts each time they pay you. For many people there’s no need for HMRC to amend your code numbers, often for one, two or even more years. But others may need their code amending more than once per tax year. Naturally, you should check your tax code if HMRC sends you notice of a new one, but even if it doesn’t you should make sure that yours is correct..

A separate and usually different tax code applies to each job or pension you have. Make sure you check each of them. While HMRC notifies your employer or pension company of any changes to your code, check your first payslip after HMRC tells you about the change (or the one after that) to make sure your employer has implemented the revised code. It’s not uncommon for employers to accidentally overlook code changes.

Tax code leeway

As a general rule, HMRC only has a right to reduce your tax code to collect tax on PAYE income, e.g. state and private pensions, and benefits in kind. It can also adjust your code to collect tax you have underpaid, or that it estimates you will have underpaid for the current tax year. Additionally, HMRC officers often take a more aggressive approach to calculating codes and use them to collect tax on all sorts of income. While it’s allowed to do this, subject to limitations, you do not have to accept this means of collecting tax earlier than it has to be paid. The following is a list of items HMRC often includes in tax codes for which you have the right to ask it to remove:

• property rental income
• profits from self-employment
• taxed investment income or dividends
• untaxed investment income, e.g. bank interest.

If you have income of the type listed above, but it’s no more than, say, £500 per year, it’s probably more convenient to pay the tax through your code, but it’s your choice not HMRC’s.

Don’t forget tax reliefs

HMRC automatically includes the basic personal tax-free allowance in your tax code but you might be entitled to others, e.g. for job expenses, higher rate relief for pension contributions or gift aid payments. While you don’t lose the right to these if they aren’t in your tax code, it means you’ll have to claim them later as part of the big tax picture.

Codes and the big tax picture

Although your tax code determines the amount of PAYE tax that will be deducted from your employment income or private pension, it’s only an estimate of your correct tax liability. Ultimately your final tax position is determined when you submit your self-assessment return or, where you aren’t required to submit one, by HMRC review. This corrects any shortfall or excess in tax payments deducted through PAYE. However, an accurate tax code prevents you from paying too much tax and having to reclaim it, or too little resulting in an unwanted and often unexpected tax bill.