Understanding your 2012-2013 PAYE Coding Notice

If you pay your tax through the Pay as you Earn (PAYE) system, over the next few weeks you will receive your PAYE Coding Notice for the 2012/2013 tax year.

Your PAYE Coding Notice tells you what your tax code should be and how it is worked out.  It also tells your employer or pension provider how much tax-free income you are entitled to and how much tax they should deduct.

Our guide will help you understand your 2012 – 2013 coding notice.  Keep reading to learn more.

Tax allowances/reliefs that increase your tax-free income

There are two main parts to your PAYE Coding Notice.

Firstly, there are tax allowances and reliefs that increase the amount of tax-free income that you are entitled to earn.  These include:

  • Tax-free allowances such as your Personal Allowance (the basic Personal Allowance for the 2012/13 tax year is £8,105)
  • Other allowances and reliefs that you are entitled to, including Married Couple’s Allowance and any professional allowances/subscriptions

If these are the only entries on your PAYE Coding Notice, they are deducted from your taxable income (such as income from employment, pensions and rent) and you pay tax on what’s left.

Items that reduce your tax-free income

Your PAYE Coding Notice may also include negative amounts which reduce the amount of tax-free income that you are entitled to earn.  These include:

  • Unpaid income tax that you owe from a previous tax year
  • Any taxable income that you receive without tax being deducted (for example company benefits such as medical insurance or a company car)
  • State benefits or any pensions that you receive without tax having been deducted

Effect of deductions from allowances

One your deductions are taken away from your tax free allowances there are three possible outcomes:

  • The items that reduce your tax-free amount are less than your allowances – this means that whatever amount is left is the amount of tax-free pay you are entitled to in the 2012/13 tax year
  • The items that reduce your tax-free amount are equal to your allowances – this means you will pay tax on all your taxable income
  • The items that reduce your tax-free amount are greater than your allowances – this means you will owe tax on the difference between the two.  The amount will be added to your overall taxable income and you will pay tax on the total over the whole tax year

Common tax codes in 2012/13

If you receive the basic Personal Allowance in the 2012/13 tax year and you have no deductions, your tax code is likely to be 810L.

This is worked out by dividing your Personal Allowance (£8,105) by ten and then adding the letter ‘L’.

If your PAYE Coding Notice is wrong

When you receive your PAYE Coding Notice over the next few weeks, if your circumstances have changed or there is incorrect information then you should contact HM Revenue and Customs (HMRC).

If the figures on your Coding Notice are incorrect, you could end up paying the wrong amount of tax.

41 comments

  1. jade says:

    Before April my tax code was 810L m and when I got my p60 it was 810L M1 what do they both mean?

  2. David says:

    I am still working but drawing a small pension which has suddenly reduced by asignificant amount .My pension provider has sent me a letter detailing the new payment and states my tax code as-D0 ,What is this?

  3. Diana Moore says:

    why my tax code I’d BR W1

  4. Odhran McGowan says:

    My tax code for 2012/2013 was 810L, it has now changed to 567L for the 2013/2014 tax year. Could this be a mistake?

    • TaxFix says:

      Odhran McGowan: Most people’s tax code for 2013/2014 will be 944L. Are you receiving any other income or benefits that might explain why you are on the tax code 567L? If not, you can contact your local tax office and ask them to provide a breakdown as to why you are on this tax code.

  5. Chris says:

    My tax code is changing from 761l to 914L will this mean I will have more take home pay.

    • TaxFix says:

      Yes, as your tax free allowance is increasing, the amount that you can earn before you need to pay tax will increase.

  6. steve budd says:

    is 810L/1 emergency tax THANK YOU

  7. Adele says:

    Hi, my tax code has changed to 761 L M, im not sure what the M stands for can you confirm? Thanks

  8. john says:

    what does tax code ot w1 mean

  9. GLENYS HORNSBY says:

    I receive a small pension each month of £584 and tax code is 459T 0 I am paying about £40 in tax each month. I am earning less than personalincome tax per annum, should I be paying tax?

  10. dawn bowrng says:

    my tax code is 656l i work 20 hours is the code right

  11. michelle says:

    hi my tax code has changed to 810L recently. how much can i earn a week before i pay tax i do 20 hours a week.

  12. Mr. Jay Patel says:

    I turned 65 in December and am still in full time work.My tax code ends with a T.As I understand, it should end in a P. Is this correct?

  13. Leanne Siekiera says:

    Hi I have recieved my tax code notice.It states on there that in previous years I have overpaid tax to the amount of £850.When I rang to enquire about this they told me that I wouldnt be recieveing this money back in a lump sum,but I would recieve it as my tax code had gone up.Surely I am entitled to have this money back.Everyones code has gone up so how am I getting it back.Thanks

  14. stewart says:

    whats the diference between tax code 761l and 810l

  15. Heather says:

    my tax code was 761L what should it be now?

  16. K khan says:

    What is the difference between 810L and 0T tax codes

  17. Linda says:

    My new tax code is 810L. My take home pay is less this month. Why is that?

  18. WAFU says:

    Question – I am in employment and earn around 44K for my job. I also draw a pension from another job of 11K. I am at a total loss as to my tax. I have just received my tax coding which according to HMRC is D0 on my pension (taxed at 40%) and only 212L on my salary. I believe this is wrong. Can anyone advise????

  19. janice wheeler says:

    does that mean our take home pay will increase a bit?

  20. Carole Robinson says:

    Why do I have a tax code 2013 with no letter

  21. David F. Austen says:

    I shall be 65 in January 2013.When my state pension starts.Will my tax code be re-adjusted automatically for
    this tax year 2012/2013 or will I have to contact
    my tax office?
    Looking forward to your reply.
    Kind regards,
    david

  22. charles ford says:

    my tax code is 406 at the moment i pay tax on my company pension will i benifit from the new rise in tax allowance

  23. rosa laino says:

    i received letter from tax office with tax code ot so i rang them and was told i had no personal allowances left which i cant understand why could itt have anything to do with me being of work sick 4 6 months between 25 july 2011 to 30 jan 2012 i have now got another tax code 810l so does it mean i could be paying more tax

  24. Deana Mistry says:

    Do you have to put the new tax code in when starting the new tax year or wait for notification.

  25. Marta says:

    I am on tax code 647L. Am I right to continue with it in 2012-2013?

  26. Irene says:

    My husband will be 65 in March 2013, I believe his tax allowances go up to £10,500 in the tax year of his 65th birthday, do I need to inform the tax office of this. (I am correct in this?)

    Thank you.
    Irene

  27. Basil says:

    I ceased work at end of December and only get an occupational penision of £600. per month as I am not retirement age yet. My pension provider has deducted tax at 0T M1 each month. I was previously a b asic rate tax payer. How do I get the tax refunded. I am being deducted £120 each month

  28. A.Myles says:

    Why has HMRC sent out tens of thousands of coding notices to pensioners wrongly assuming they are earning more than £30K per annum and reducing their code to 810?

  29. Azeem Patel says:

    What does 293T tax code mean?

  30. jean says:

    could you please give tax codes and what they mean?

  31. F Burns says:

    does ISA interest reduce P.A if it causes 24000 limit to be exceeded (over 75,s)

  32. F Burns says:

    does tax free interest from ISA savings count as income affecting gross income limit of e.g 24000 befor reducing personal allowance for over75′s

  33. Tricia Meek says:

    Hie, I was on tax code 645L last year but have recently got a letter saying my tax code from April 2012 will be 293T. I work part time and I do not get any benefits not even tax credits. my circumstances have not changed. What exactly does the new tax code mean?

  34. DaiWhittax says:

    I am 65 in June 2012.Should my tax allowance be adjusted from start of 2012-13 tax year automatically or do I need to contact IR.

  35. CHRISTINE LAWSON says:

    Why would my 6 year old and 11 year old children get a paye coding notice?

  36. Adele Lynch says:

    Hi – I was on tax code 355T – from April I will be on 810L – will I be better off on the new tax code?

  37. John says:

    Hey am 29 years old and i dont have any company benefits and receive tax code for 2012/13 which is 333L am very confused as my current tax code is 761L. Code the new tax code be wrong?

  38. Tax Fix says:

    Lisa – yes they are, and we’ll expand on this in the next few weeks. For the 2012/2013 tax year, the personal allowances are:

    Basic – £8,105
    Age 65-74: £10,500
    Age 75 or over: £10,660

  39. Lisa Butcher says:

    Are all the Personal Allowances changing in 2012?

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