Most directors and employees will already have been issued a tax code for the 2023/24 tax year, and it is important to check the figures as a very large proportion of codes will be incorrect. If you’ve been subject to an error, this could mean a future corrective tax bill.

Common errors with tax codes

Tax codes consider allowances, expenses, benefits, and income; errors are likely.

  • Allowances: The code can often assume the incorrect level of income when it comes to the amount of available personal allowance.
  • Allowable expenses: Deductions for subscriptions and professional fees will be based on what was claimed previously, yet these will invariably increase annually.
  • Taxable benefits: For most benefits, HMRC will be unaware of any changes from the previous year.
  • Untaxed income: Figures for bank and building society interest can be too high where, for example, an account has been closed.

Emergency codes

A particular problem can be the use of an emergency code. These can be applied if there is a change in circumstances, such as:

  • A new job;
  • Taking on an additional part-time job; or
  • Transitioning from self-employment to employment.

The emergency code is used because HMRC will often not receive the employee’s income details in time after the change. Although use of the code is temporary, it can cause cashflow problems if you are the employee.

If you are an employee and you are starting a new job, you should give your new employer your P45 as soon as possible. If you are moving from self-employment, you should complete the starter checklist.

Checking and correcting codes

The easiest way you can check and correct your tax code is by logging onto your personal tax account using your Government Gateway user ID and password. HMRC can be notified of any changes that affect the tax code, and employer details can be updated.

The starting point for checking or correcting a 2023/24 tax code can be found here.

How can we help you?

If you are a company director or an employee and you have been issued an incorrect tax code for the 2023/24 tax year, your future tax bill could be affected. If you need help, please contact us on 01444 716946 or on 01273 963656 or alternatively email us here.