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Why Could My Tax Code Change?

Your tax code determines how much tax is deducted from your wages or salary. It is set by HMRC based on your earnings and any tax allowances or reliefs you may be entitled to. Tax codes often change when there’s a shift in your financial situation, and it’s important to understand why that might happen.


Here are some common reasons why your tax code could change:


  • Starting a new job or changing jobs: When you begin a new job, your employer may not have all your previous tax details, resulting in an incorrect tax code. Once your details are updated, HMRC will adjust your tax code accordingly.

  • Receiving multiple sources of income: If you have more than one job or receive income from pensions, savings, or other untaxed sources, HMRC may change your tax code to reflect these different earnings.

  • Taxable benefits: If you receive certain benefits from your employer—like a company car, medical insurance, or other perks—these are considered taxable income, and HMRC will adjust your tax code to reflect the additional tax owed on these benefits.

  • Claiming tax reliefs or expenses: If you’ve claimed tax relief on work-related expenses (such as travel, uniform, or tools), your tax code may be adjusted to account for the relief, meaning you could pay less tax in future.

  • Errors or updates: Occasionally, HMRC may make an error in calculating your tax, or you may update your details (e.g., getting married, moving to a new house), which requires a change in your tax code to ensure you’re paying the correct amount.


If your tax code changes unexpectedly, you could end up paying too much or too little tax. PAYEback can help you review your tax records and claim back any overpaid tax, ensuring that your tax affairs are in order. If you believe your tax code is incorrect, we can assist you in resolving the issue with HMRC.


 
 
 

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