How do I change my tax code?
If you’ve started a new job, received additional income like a pension, or experienced personal changes such as marriage or divorce, you might need to change your tax code. In this guide, we’ll explore what tax codes are, why they’re important, and how you can change yours.
What is a tax code?
Your tax code determines how much income tax you pay on your salary through PAYE (Pay as You Earn).
It’s a combination of numbers and letters that tells your employer or pension provider how much tax-free income you get in a given financial year.
The numbers refer to how much tax-free income – and Personal Allowance – you get in that year.
The letters represent your situation and how it affects your allowance.
For more information, read our guide, How income tax and personal allowance works.
Why tax codes are important
Your tax code helps HMRC work out how much income tax you need to pay.
This makes sure you get paid the right amount and don’t pay too much or too little tax on your salary.
Understanding your tax code is crucial because it directly impacts you.
Overpaying taxes can cause financial strain while underpaying taxes can mean that HMRC can ask for the money back, or even issue fines.
Types of tax codes
There are various tax code types for different situations.
For example, a common tax code for people with one job or pension is 1257L.
The number “1257” represents your tax-free allowance, which is £12,570.
The letter “L” means you have no special circumstances, so the standard tax-free Personal Allowance applies.
To find out what your tax code meansOpens in a new window, visit GOV.UK.
How do I check my tax code?
You can find your tax code:
- on your payslip
- using GOV.UK’s tax code checkerOpens in a new window
- on the HMRC appOpens in a new window
For more information, read our guide to understanding your payslip.
Why would I want to change my tax code?
In most cases, your employer will let HMRC know if your income changes so they can update your tax code.
HMRC will contact you if your tax code changes.
However, if HMRC has the wrong information about your income, you might have an incorrect tax code.
You should tell HMRC if you think your tax code is wrong.
Your tax code changes with your circumstances. Some reasons why your tax code might change include:
Employment changes: if you switch jobs, start a new job or start earning income from an additional job or pension, your tax code may change to account for any taxable income changes.
For example, if you pick up a second job, your tax code may change to account for the additional income.
Personal Allowance alterations: changes in your tax-free allowance due to personal circumstances can affect your tax code.
For example, if you start claiming your State Pension, your allowances may change.
Benefits or deductions: if you get taxable work benefits like a company car or medical insurance, you might need a new tax code.
For example, if your company car benefit ends, your tax code may reflect the reduced taxable benefit.
Marriage status changes: if you get married, divorced, or enter a civil partnership, your tax code might change to reflect combined allowances.
For example, if you get married, you might be able to get a slightly larger tax-free allowance using Marriage Allowance.
Underpayment or overpayment: if you’ve paid incorrect taxes in the past, HMRC may adjust your tax code to correct this.
For example, if you underpaid tax last year, HMRC may change your tax code to collect the amount you owe.
If you think your tax code should have changed for any reason, you can correct it by contacting HMRC.
Changing your tax code
If you think your tax code is wrong or if it hasn’t changed but should have, you should report a change in income.
To do this, you’ll need to sign in to your tax account using your Government Gateway user ID and password.
Then, use GOV.UK’s Income Tax checkerOpens in a new window to:
- update your employment details
- tell HMRC about a change in income.
If you don’t have an account, you can create one. You need your National Insurance number and a valid form of ID.
Alternatively, you can contact HMRCOpens in a new window by phone or post.
After you report your change, HMRC will contact you and your employer or pension provider to let you know they’ve changed your tax code.
Your next payslip should then show your new tax code and any adjustments to your pay if you were paying the wrong amount of tax.
