Income Tax Allowances ? Tax Code Suffix Y

22 December 2015

From 6 April 2016 the basic personal allowance will increase to £11,000. This increase will bring the basic personal allowance to a level higher than the maximum personal age allowance for customers born before 6 April 1938. As a result HMRC will no longer use suffix ‘Y’ on tax code notifications P2, P6 and P9 issued for the tax year beginning 6 April 2016.

As part of Annual Coding, all individuals who continue to be liable to pay income tax and would previously have had a ‘Y’ suffix in their tax code, will be issued with a P2 Notice of Coding advising them of their new tax code.

Employers and pension providers will also receive a P9 coding notification for the tax year starting 6 April 2016 which will show the appropriate tax code to use for all customers affected. In subsequent years the uplift will continue as normal on a P9X.

HMRC’s systems will still accept a ‘Y’ suffix if submitted but HMRC have requested they not be used by employers and payroll agents.