What is the 2020/21 PAYE tax code? What is the PAYE code from 6 April 2020? What is the PAYE code for the year to 5 April 2021?

Despite delaying the 2019 Budget to 11 March 2020 and confirmation from HMRC that PAYE coding notices will be late this year if they have to be reissued after the Budget, the government has released details of the proposed PAYE codes for 2020/21.

The basic PAYE tax code is set at 1250L for employees which is the same as for 2019/20. This gives an employee a personal allowance of £12,500 for the year. This is also called the emergency code.

Employees who earn more than £125,000 have no personal allowance and receive an 0T tax code (see below).  

Employees who earn between £100,000 and £125,000 have their personal allowance tapered away. It is reduced by £1 for every £2 in excess of £100,000. 

Employees who have claimed the Marriage allowance, by virtue of a low-earning spouse, have a code with a suffix of M. Those who surrender the allowance have a suffix of N.

Employees who are Scottish Taxpayers have the prefix S. The higher rate threshold in Scotland will remain at £43,430 in 2020/21, compared to £50,000 in the rest of the UK.

Employees who are Welsh Taxpayers have the prefix C. The higher rate threshold in Wales is the same at that for the rest of the UK at £50,000.

What tax code do I use for 2020/21?

If the employee is a starter or casual worker complete the Starter Checklist.

Otherwise use 1250L for employees unless:

  • Notification of a different code is advised by HMRC.
  • The employee's code was not the basic code last year, in which case expect the code to be the same as last year unless otherwise notified by HMRC.

It is advisable to double-check with HMRC and if in doubt check online or phone the tax office.

Do not carry forward any week one or month one adjustments.

What is the 'emergency' tax code for 2020/21?

  • 1250L is the default code. Codes may then be suffixed with W1 (weekly pay), M1 (monthly pay) or X.

What is code ending in OT?

This means that you are not given any allowances against tax. This is most likely because your employer has probably not been given your starting information, is a casual worker or earns over £125,000.

How do I check my tax code?

Statistically less than 80% of employees bother to check their PAYE code. It is foolish not to check it.

  • If your code is lower or higher than expected you need to find out why.
  • It may have been adjusted by HMRC to code out underpayments of tax in previous tax years, see PAYE collection of tax debts. From April 2020 HMRC will start coding out tax debts during the tax year rather than waiting until the following 6 April.
  • If you receive any benefits from employment or do more than one job, or receive investment income and are a higher rate taxpayer you should find that your PAYE code is restricted in some way. 
  • If your taxable benefits are not adjusted for on your PAYE code it may be that there is an error or your employer may be payrolling your benefits. Check with your employee first.
  • If you fail to check your code you may pay the wrong amount of tax. Do not rely on HMRC to provide you with the correct code.

See How to check your PAYE code.

Pensioners

Pensioners no longer qualify for any additional age allowance.

Married pensioners over 83 (born before 6 April 1935) may receive the married couples allowance adding up to 891 to their tax code.

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