Your tax code is used by your employer to work out how much tax to deduct from your pay. Its therefore in your interest to make sure its right! If you think your tax code may be wrong you should tell your tax office straight away.

You will receive a notice of your tax code every year before the beginning of the new financial year on April 6th. The address and telephone number of your tax office will be on the notice. Tax codes are made up of numbers and a letter. If the number comes first it is this figure that is used by your employer.

As a rough rule of thumb if you multiply this number by ten you will arrive at the amount of income you can earn in a year before you have to pay tax. The letter that follows shows how that figure may be adjusted as a result of any changes in the Budget. Codes with two letters usually show that you have two sources of income but that all your tax allowances have been applied to your first or main source of income.

If on the other hand your tax code has a letter K in front ofit this means your total tax allowances are less than your total deductions.

For more details see the Inland Revenue booklet Understanding your Taxcode.

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