26 July 2023
HMRC has released a new tool to assist with understanding what a tax code means and how it is made up.
The tool asks for the following information:
- which country you live in
- is your tax code BR, D0, D1, 0T, NT or other
- if other, does it start with a K?
- the numbers of the tax code
- the suffix letter
- if the code has W1,M1 or X at the end
- estimated annual income.
From this, the tool provides an amount of tax expected to be deducted in differing pay period and an explanation of what the code means.
With tax code notices coming through a personal tax account by default for many new users, this tool will likely replace the usual explanations that came with paper notices. This tool could be useful to direct employees to if they require further assistance with understanding their tax code.
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CIPP Comment: The Policy team has raised concerns with the wording “How much tax you will pay” on the tool results page, as many additional factors could have an impact on these figures. |
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