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Post Info TOPIC: Understanding a clients tax code


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Understanding a clients tax code


My client does his own PAYE, but he's just received his new tax code and asked me what it means. I haven't got a clue as I dont offer a payroll service.

I need to know what a 'K' code is? Can anyone help me please?

Thanks

Sundance

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Hi Sundance,

A K code simply indicates how much must be added to your clients taxable income. If your clients deductions (untaxed income on which tax is still due) are more than his allowances hell be given a K code, to ensure he pays tax on the excess.

The excess tax due is divided by 10 and added to the letter K. So, whereas with other tax codes the number indicates the amount of income a person can have tax-free, the number in a K code indicates how much must be added toto taxable income.

Guy


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Thanks Guy. At least I can now attempt to explain the basics!

Sundance

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