5. What your PAYE Coding Notice means
HM Revenue and Customs (HMRC) may send you a PAYE Coding Notice before the beginning of a tax year or if your tax code changes during a tax year.
It tells you what your tax code is and how it’s been worked out. Your employer or pension provider uses the tax code to work out how much tax to take from payments they make to you.
You don’t need to do anything with your PAYE Coding Notice, unless you think it’s wrong.
What’s on your PAYE Coding Notice
Along with your tax code, your PAYE Coding Notice shows:
- allowances that reduce your tax bill
- things that you’ve got to pay tax on through your wages or pension
Positive numbers on your PAYE Coding Notice
Positive numbers are part of your income that you don’t need to pay tax on. They include things like:
- the tax-free Personal Allowance you’re entitled to
- Married Couple’s Allowance if you get it
- work expenses you claimed tax relief on, for example travel
- Personal Savings Allowance for savings interest
- Dividend Allowance for dividend interest
Negative numbers on your PAYE Coding Notice
Negative numbers are income that you haven’t paid tax on, but the tax will be collected by your employer or pension provider before they pay you.
They include things like:
- benefits from your job that you need to pay tax on
- state benefits (including the State Pension) that you’re getting but need to pay tax on
- tax you owe from previous years that you’re paying through your employer or pension provider
What the calculation shows
The calculation shows how HMRC has worked out your tax code.