How to check your 2019-20 PAYE code

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

Why have I received a P800 tax calculation letter from HMRC?

P800 tax calculation letter

Why have I received a P800 tax calculation letter from HMRC?

After the end of each tax year HMRC review the income and PAYE information that they receive from employers, pension providers and banks to ensure that the correct amount of tax has been deducted from an individual’s income.  In most cases, the correct tax has been deducted, with no further action required.  However, in some cases HMRC discover that the correct tax hasn’t been paid, which means they will send a P800 tax calculation letter to the individual concerned to notify them of the shortfall or excess tax paid.  The letter is normally sent sometime between June and September following the end of a tax year.

Discrepancies in the amount of tax paid are likely to be caused by a change in jobs, working for multiple employers or receiving pensions from several sources.

If you receive a P800 calculation it is important to check the calculation to ensure that you agree with it. HMRC don’t always get it right!  Check the calculation against the following documents as appropriate:  P60, P45, P11D, tax deduction certificates from banks, dividend vouchers and a PAYE coding notice if you received one (refer to our blog on PAYE coding notices here).

In many cases underpayments arise due to incorrect PAYE codes or employer mistakes.  If you disagree with HMRC’s calculation it is important to challenge it by contacting HMRC.  If your employer made a mistake without taking ‘reasonable care’, HMRC may ask them to pay the tax instead.  If HMRC is at fault you will still have to pay the tax, unless they made mistakes in prior tax years too, in which case it may be possible to get the tax liability cancelled.