Each individual’s PAYE code determines how their employment income is taxed. The PAYE code normally includes a tax free element to make use of an individual’s personal allowance if they are entitled to one. If the code isn’t correct it can result in under- or over-payments of tax.
The basic PAYE code for the 2019-20 tax year, which runs from 6 April 2019 to 5 April 2020, is 1250L and incorporates a tax-free personal allowance of £12,500. This is the PAYE code that you may start to see on your payslips from April 2019 onwards. HMRC do not normally send out a notification if you are on the basic PAYE code.
However, if your tax code is different to the basic code of 1250L, then you should have received a ‘PAYE Coding Notice’ (form P2) from HMRC. This notice is sent to both you and your employer and/or pension provider so that they are notified of the PAYE code that they need to operate for you. You can also check your PAYE code via your personal tax account with HMRC here.Continue reading