When it comes to terminology within the accounting profession, it can be difficult to understand and remember each term. In this blog, we are going to be giving you a refresher about tax codes. So, if you are new to accounting or you just need a brief reminder, then please keep on reading.
What are Tax Codes?
Tax codes are used to decide how much tax is needed to be deducted from ones pay slip or pension. The HMRC will work out the tax code and they will send it to you so you can ensure that the correct amount of tax has been paid.
What Does My Tax Code Mean?
Tax codes are created using different letters and numbers to create your unique individual tax code. The HMRC can contact you and explain how your code has been made up with those numbers and letters given to you.
How Can I Check What My Tax Code Means?
On the government’s official website, there is a ‘Tax Code Checker’ that will allow you to correctly discover the following:
- What your tax code letters and numbers mean
- How much tax is needed to pay
- Your next steps
What Could I Be Asked About?
There are a few questions that could be asked of you by HMRC which all depend on your circumstances. These are:
- Have You Received Any Company Benefits?
- What Company Benefits Do You Get?
- What Is the Amount of State Pension That You Get Each Year?
What Do the Numbers and Letters Mean in My Tax Code?
The numbers and letters in your tax code tells your employer and pension providers how much tax-free income you will receive during that tax year. The HMRC will work out your unique code based on the numbers and letters in your tax code.
On the official GOV.UK website, you will be able to find an in-depth list of what each of the tax code letters and numbers stand for and how this will decide your payments.
Here at MCC Accountants, we are professionals at what we do. We have been lucky to build client relationships, whether they are new or old, to create an accountancy practice that is tried and trusted by hundreds of businesses across the Northwest.
We are one of the leading accountancy practices in the Northwest that work with limited companies, partnerships, sole traders, and more!
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Our tailored accounting packages can give you peace of mind when it comes to finances and financial deadlines. With over 15 years of experience as MCC Accountants, we have built a business that provides top-quality accounting services to over 200 clients nationwide!
The team at MCC Accountants are always here with excellent guidance and the advice you need to financially succeed as a business.
If you require further advice about tax codes, or our accounting services, then please do not hesitate to contact us today!