Checking your tax code – 2021/2022

If you pay all or some of your income tax via PAYE, it’s important to check that you are on the correct tax code. As we start the new 2021/2022 tax year, HMRC will be sending out your individual coding notices (usually via post); you may have already received yours.

Personal Allowances;

  • The basic PAYE tax code is set at 1257L for employees. This gives an employee a personal allowance of £12,570 for the year.
  • Employees who earn more than £125,140 receive no personal allowance and should be on an 0T tax code.
  • Employees who earn between £100,000 and £125,140 have their personal allowance tapered away. It is reduced by £1 for every £2 in excess of £100,000.

What if my tax code has changed?

  • Starting a new job when your new employer doesn’t have a P45: this will trigger an emergency tax code, as there is not enough information to see how much you’ve earned and how much tax you’ve already paid during the tax year.
  • Receiving an income from an additional job or pension: if your first job uses up your personal allowance, your second income might be taxed on a different code.
  • Changing your income: earning more or less can affect how much tax you’re liable to pay.
  • Starting or stopping benefits from your job: this could affect how much money you receive in your payslip, therefore changing how much tax you need to pay.
  • Starting or stopping taxable state benefits, including the state pension, widow’s pension, widowed parent’s allowance, bereavement allowance, incapacity benefit, employment and support allowance and carer’s allowance.

Employees with a new tax code

If HMRC issue a new tax code for an employee, you will receive either a paper form P9(T), ‘Notice to employer of employee’s tax code’, or an internet notification of coding if you are registered for HMRC’s PAYE Online Service. To access your code online, you will need to:

  1. Go to the login page for PAYE online and select ‘Sign in’.
  2. Sign in to the service using your Government Gateway User ID and password.
  3. From your Business Tax Account home page, select ‘Messages’ and then select ‘PAYE for employers messages’.
  4. Select ‘View your tax code notices’.
  5. From the tax year drop down menu, select ‘2021/2022’.

You should use the form P9(T) or the online tax code notification with the most recent date if you have received more than one for 2021/22, and discard any previous notifications. You should update your 2021/22 payroll to reflect the tax code shown in the notification for that employee.

Employees without a new tax code

If HMRC have not issued a tax code notification for an employee, you will need to update their 2020/21 tax code to reflect the increase in the personal allowance to £12,570 for 2021/22. To do this, you should:

  • add 7 to any tax code ending in L;
  • add 8 to any tax code ending in M; and
  • add 6 to any tax code ending in N.

For example, 1250L will become 1257L.

You should not carry over any ‘week 1’ or ‘month 1’ markings

Don’t forget

If you worked from home at any point during the 2020-2021 tax year due to the Covid-19 pandemic, you are able to claim homeworking relief for the entire tax year.

If you believe your tax code is incorrect, you can either contact HMRC directly or let us know and we can check your coding notice and amend if required.