Tax codes explained Checking your tax code

When you turn 75, contact HMRC about your tax code

Mistakes can arise with your code, as many of the figures shown on your coding notice are estimates and will vary according to your individual circumstances. If you have more than one source of income, PAYE codes may be allocated incorrectly, causing you to pay more tax than you should.

If your tax code is wrong

Your coding notice shows all the allowances and deductions that you are entitled to, and it is this information that is used to work out your tax code. It is crucial that you check the details and notify your tax office of any discrepancies – otherwise, you may end up paying the wrong amount of tax.

To see what a coding notice looks like – and a detailed explanation of what it means – see the annotated specimen from HMRC (below):

Tax code checklist

• Check your tax code. Aim to sort out any problems promptly, by contacting your tax office.
• Ensure all allowances and reliefs you are claiming are shown on your coding notice.
• Contact HMRC if your circumstances change – for example, if you become self-employed, you have new sources of untaxed income, you become widowed, married or divorced, or you are approaching 65 or 75 years – as these could affect your tax code.

More help with tax codes

HMRC leaflets and forms

• IR121 Approaching retirement: a guide to tax and National Insurance contributions
• IR208 Payslips and coding notices
• P2 Coding notice
• C/FS Complaints and putting things right (factsheet)

HM Revenue & Customs

• www.hmrc.gov.uk
• Understanding tax codes

For more expert advice on tax codes, read the Which? Essential Guide: Tax Handbook 2011/12.