The most common reasons for a tax code change are if you start or stop getting:
- benefits from your job that you need to pay tax on, for example a company car
- expenses from work that you can reclaim tax for
- income that isn’t being taxed (like rental income)
- State benefits (including the State Pension) that you need to pay tax on
Your tax code will also change if you need to pay tax due from previous years through your wages or pension.
You may be temporarily put on an emergency tax code if you change jobs.
What happens when your tax code changes
You, your employer or your pension provider tells HM Revenue and Customs (HMRC) about the change to your situation.
HMRC works out what to do with your tax code (or codes if you’ve got more than one).
HMRC sends a new tax code to your employer or pension provider. Once they’ve got it, they’ll use it to work out how much tax to take from your payments from the next time they pay you.
HMRC sends you a PAYE Coding Notice that explains the changes.