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PAYE Code numbers and PAYE Reconciliations – Tax Tips

Welcome to the Hill Lillis & Company Tax Tips.

Tax and National Insurance deductions are made at source from most taxpayers in the UK through the PAYE scheme.  Each employee (or pensioner) is allocated a tax code which the employer uses to calculate the deductions to be made. If your affairs are straight forward then your code is likely to be 810L which indicates you are entitled to the basic personal allowances of £ 8,105.

However if your tax affairs are more complex, you code may be very different as HMRC seek to collect the tax due on sources of untaxed income or make other adjustments. Some of the most common adjustments are for the benefits you receive from your employment (such as a company car or private medical insurance), whereas pensioners may see a restriction in respect of the State Retirement pension they receive which is never taxed at source.

Often these adjustments are estimated, based on information supplied in previous tax years, and problems can arise where someone has multiple employments or pensions, so it is understandable that on occasions the tax collected is not always correct. Therefore after each tax year HMRC issue many PAYE reconciliations (on form P800) showing how they have computed the under or over deduction of tax.

Our experience shows that there has been a great deal of distress caused by HMRC unexpectedly issuing  PAYE reconciliations covering  several years’  tax arrears, and we note that often there are errors on these calculations. We recommend you check them carefully, and seek advice if you think there is a problem.

We offer a free 30 minute consultation, so if you would like any additional information regarding the above or any other tax issues concerning you, then please contact us 0121 351 6777 or visit us in our offices in Walmley Village, Sutton Coldfield.

This article features in Walmley Pages Magazine, delivered to residents in

Walmey and surrounding areas of Sutton Coldfield.

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