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HMRC internal manual

PAYE Manual

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HM Revenue & Customs
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Coding: codes: how they are used and calculated: P2 special notes

There are a number of special notes that explain how a customer’s tax code is made up. These special notes are in addition to the standard notes. You can select the special notes to be printed on the P2.

For example if you add the note indicator WIFE the following note will be generated on the customer’s P2

‘We have changed your tax code after your wife gave us up to date information’.

You can add more than one special note by selecting the relevant special note. Where the customer has state pension / benefits in their code three special notes are available to generate a further explanation on the customer’s P2.

These special notes and examples of when they can be used are

  • NEW STATE BENEFIT - where the customer has started to receive a taxable state benefit and we have estimated and included the ‘annual’ amount that the customer will receive in the year of commencement
  • EST STATE PENSION - where the customer has started to receive the state pension and we have estimated and included the ‘annual’ amount that the customer will receive in the year of commencement
  • NEW STATE PENSION - where the customer has started to receive the state pension and we included the ‘annual’ amount that the customer will receive in the year of commencement

The NEW STATE PENSION note will also be automatically included in addition to the special note STATE PENSION (NIB notified from DWP) where the ‘annual’ amount of state pension is coded in the year of commencement, from an automated P46(DWP)

You may still need to write to a customer occasionally if a specific circumstance is not covered by a P2 note, or where you need to provide more detailed information. The EXPLANATION special note should be used to let the customer know that more information will follow where you need to issue a separate letter.

The table below gives a list of special notes and circumstances when to use the special notes and explanatory note.

Special note Circumstance P2 Special note
     
AGENT For acknowledgement of information or contact received from tax adviser We have changed your tax code after your tax advisor gave us up to date information.
EMPLOYER For acknowledgement of information or contact received from employer We have changed your tax code after your employer gave us up to date information.
RETURN For acknowledgement of information or contact received from the tax return Your tax code has changed because of information in your tax return.
YOU For acknowledgement of information or contact received from the customer We have changed your tax code after you gave us up to date information.
HUSBAND For acknowledgement of information or contact received from husband We have changed your tax code after your husband gave us up to date information.
WIFE For acknowledgement of information or contact received from wife We have changed your tax code after your wife gave us up to date information.
PARTNER For acknowledgement of information or contact received from partner We have changed your tax code after your partner gave us up to date information.
PARENT For acknowledgement of information or contact received from parent We have changed your tax code after your parent gave us up to date information.
SON For acknowledgement of information or contact received from son We have changed your tax code after your son gave us up to date information.
DAUGHTER For acknowledgement of information or contact received from daughter We have changed your tax code after your daughter gave us up to date information.
AGENCY Where the customer is an agency worker [EMPLOYER NAME] will use this tax code because you are working for more than one agency. Next year [EMPLOYER NAME] will use code BR. This means you will pay tax at [BASIC RATE %] on all your income from [EMPLOYER NAME]. Please contact us if you are still working for [EMPLOYER NAME] on 6 April [TAX YEAR END DATE].
EXPLANATION Where you need to issue a separate letter to the customer because the P2 notes do not cover the customers specific circumstances, or where we need to provide more detailed information We will write to you to tell you about the changes we have made to your tax code.
CAR DISCOUNT Where the standard note NCAR is present in the customer’s code and you add CAR DISCOUNT as a special note and the individual does not have a live primary employment record.  
See also the table of standard notes at PAYE11040 and the explanatory notes for car benefit As you had a company car in your previous job, we expect your next employer to provide one too. You have to pay tax on the benefit of using an employer’s car for your private use. We work out the amount using the:
  • car’s cost
  • carbon dioxide (CO2) emissions value
  • fuel type
  • number of days the car was available to you
  • payments you make for the private use of the car
Your benefit, after taking off the environmentally friendly car discount, is £[DEDUCTION VALUE]. For more information go to . If you still think it is wrong, please tell us.      
  CUMULATIVE Where the previous pay and tax figures have been received and the code has been revised to a cumulative basis We have sent [EMPLOYER NAME] your new tax code because we now have all your pay and tax details for this tax year. [EMPLOYER NAME] will check if you have paid too much tax this tax year. If you have you will get a refund.
  CODE ERROR Where the employer is operating the wrong code We think [EMPLOYER NAME] has not been using the right tax code and you have paid the wrong amount of tax. They will now start using this new tax code to take the right amount of tax from you from now on. If you have not paid enough we will check at the end of the tax year and let you know. Please check [EMPLOYER NAME] is using [TAX CODE].
  DATE OF MARRIAGE Where a reduced amount of married couple’s allowance has been coded because the customer married during the current year. Add DATE OF MARRIAGE as a special note You will get Married Couple’s Allowance if you are married and living together and at least one partner was born before 6 April 1935. It is given at 10% and the amount you get depends on your total taxable income. The maximum amount for the year is £[MARRIED COUPLES ALLOWANCE FULL RATE O75 X 10%] but as you got married during the year the Allowance has been reduced to £[MARRIED COUPLES ALLOWANCE X 10%]. We have included [MARRIED COUPLES ALLOWANCE - ALLOWANCE RESTRICTION] in your tax-free amount. For more information about the Allowance and transferring unused amounts go to .
  NEW STATE BENEFIT If state pension / benefit is present in the customer’s code and you add NEW STATE BENEFIT as a special note.  
For example where the state pension descriptor is used for a bereavement benefit or carer’s allowance and the ‘annual’ amount is coded in the year of commencement We have been told you started to receive a state benefit this year. The state benefit is taxable but the Department for Work and Pensions cannot take tax off the payments. We estimate the full benefit for this year would be £[DEDUCTION VALUE]. We know you will not receive the full amount this year but we have reduced your tax-free amount by £[DEDUCTION VALUE] so [EMPLOYER NAME] will tax you on the actual amount you will receive in the year. You will only be taxed on the benefit for the number of months or weeks you get it.  
  EST STATE PENSION If state pension is present in the customer’s code and you add EST STATE PENSION as a special note.
This note should be added where an estimated ‘annual’ amount of state pension is coded in the year of commencement We have been told you have started to receive the State Pension which is taxable. We estimate that your pension for the full year would be £[DEDUCTION VALUE]. We know you will not receive the full amount this year but we have reduced your tax-free amount by £[DEDUCTION VALUE] so [EMPLOYER NAME] will only tax you on the actual amount of the pension you receive. You will only be taxed on the pension for the number of months or weeks you get it.  
  NEW STATE PENSION If state pension is present in the customer’s code and you add NEW STATE PENSION as a special note.
This note will also be automatically included where the ‘annual’ amount of state pension is coded in the year of commencement, from an automated P46(DWP) The Department for Work and Pensions have told us that you now receive State Pension or other state benefits which are taxable. We estimate the full amount for this year would be £[DEDUCTION VALUE]. We know you will not receive the full amount of this pension this year but we have reduced your tax-free amount by that £[DEDUCTION VALUE] so that [EMPLOYER NAME] will only tax you on the actual amount of pension you receive. You will only be taxed on the pension for the number of months or weeks you get it.    
  STATE PENSION (NIB notified from DWP) This note will be automatically included where state pension is coded from an automated P46(DWP), or for the first time from the DWP uplift file, during annual coding The Department for Work and Pensions has told us the weekly amount of State Pension that they pay you.
  P45 20YY Where you are requesting the customer’s P45 Part 1 for missing details for CY only.  
Where YY is the last two digits of the start of the current tax year Please send us any original P45 ‘Employee leaving work’ certificates that your previous employers gave you from 6 April [TAX YEAR START DATE].  
  P60 20YY Where you are requesting the customer’s pay and tax details for CY only.

Where YY is the last two digits of the end of the current tax year.

Note: This note should not be used to request missing P60 details, where reconciliation will automatically take place. We will review your tax position once we have all your income details for the year to 5 April [TAX YEAR END DATE]. If you have had more than one pension we will need details from each of them. If you also got benefits from your employer we will need the benefit statement from your employer (known as form P11D ‘Expenses and Benefits’).    
  P91 Where the customer has not returned an employment history form P91 Please fill in and send back the form P91 Employment Record Enquiry which we have sent you. Until we have it you may be paying too much tax. [EMPLOYER NAME] will use this tax code.
  EARLIER YEARS ADJUSTMENT Where the customer has an earlier year’s adjustment to be included in their code Earlier Years Adjustment Calculation
(The calculation that is displayed in IABD will be reproduced on the P2 where this special note is selected on the Special Notes screen).      
  P810 Where you are acknowledging the receipt of form P810 and you have changed the customer’s code Thank you for completing the P810 ‘Tax review form’; we have now amended your tax code.
  JSA ESTXXXX Where you have included a figure of Jobseeker’s allowance in the customers code on a P6.  
XXXX is the estimated amount the signal would be input, for example, as JSA EST 1255 We are waiting for details from Jobcentre Plus because we think you received Jobseeker’s Allowance in this tax year. In the meantime we have included an estimate of £[xxxx] in the tax code we have sent to [EMPLOYER NAME] so that you pay the right amount of tax. If you know the actual amount that you received or if you think our figure is wrong, please tell us.  
  NOT OP - XXXX.XX Where you are not issuing the code to the employer and the record is for a non-SA customer.
Where XXXX.XX is the amount of the underpayment Your tax code has been changed to [TAX CODE] but [EMPLOYER] is unable to use this. We think that you will pay about £[ESTIMATED UNDERPAYMENT] less tax than you should do this year. We will check if this amount is right at the end of the tax year and then tell you how we will collect any tax you have underpaid.  
  NOT OP SA - XXXX.XX Where you are not issuing the code to the employer and the record is for an SA customer.
Where XXXX.XX is the amount of the underpayment Your tax code has been changed to [TAX CODE] but [EMPLOYER] is unable to use this. We think that you will pay about £[ESTIMATED UNDERPAYMENT] less tax than you should do this year. We will check this when we look at your tax return and we will then let you know how we will collect any tax you have underpaid.