What does the letter T mean in my Tax Code?

Tax Code T is used when your tax affairs under PAYE are not standard. According to HMRC a T tax code is issued when “Your tax code includes other calculations to work out your Personal Allowance”.

It’s a code typically created when less common adjustments to your personal allowance are necessary or when HMRC requires additional information to determine your tax code.

Unlike emergency tax codes the number part of your T tax code reflects your tax free personal allowance and could look something like 1234 T.

Essentially acting as a temporary signal a T code helps HMRC make necessary adjustments to your personal allowance so your employer or pension provider deducts the right amount of income tax.

This code undergoes an annual assessment, and amendments may be implemented at times when HMRC receives any missing tax information.

If your tax code ends with the letter T, it’s crucial to verify the accuracy of your tax deductions and supply HMRC with any information they request.

While the use of a T code is sensible it doesn’t always mean that you pay the right amount of tax.

This is why actively checking and helping HMRC where you can is essential to not overpaying tax.

Why have I been given a T tax code?

Generated by HMRC (not your employer) a T code is often given when:

• You receive taxable benefits, such as a company vehicle, which can complicate how your code is calculated.
• Your earnings exceed £100,000, this can lead to a reduction in your personal allowance, which is the amount of income you can earn before you start paying tax.
• HMRC requires supplementary information to accurately determine your tax free allowances or eligible deductions.
• HMRC might need verification of specific income details or taxable benefits to accurately determine your final tax code.

When the code is in use you might notice variations in your monthly tax deductions as HMRC implements updates.

How can I check my tax code?

Several methods exist for verifying your tax code online, with accessing your HMRC online tax account being the most straightforward approach.

To check your tax code through your personal tax account (PTA) you can access your HMRC account here.

Input your government gateway ID. Once logged in, go to ‘View your tax code’ in the ‘Tax’ section. Your tax code will be displayed along with a comprehensive explanation.

You can also verify your current code by using HMRC’s online Income Tax checker, or their income tax helpline if you would prefer to speak to someone.

The breakdown of how your tax code is calculated may highlight that your code is not up to date in which case you should contact HMRC to let them know.

To manage your code effectively you should:

• If requested forward accurate details to HMRC regarding your earnings, benefits, or income sources.
• Ensure timely submission of all HMRC requested documentation to prevent calculation errors.
• Keep tax related forms given to you by your employer or pension provider so you can give them to HMRC if they need them. For example a P60, P45 or pension statement.
• Monitor your tax code consistently via your personal tax account or wage slips.

What if my T tax code is wrong?

A wrong tax code usually means that you will not pay enough tax or pay too much and be due a tax refund.

Overpayments often occur because the tax deducted may not reflect your full allowances, resulting in higher deductions than necessary.

On the other hand, an underpayment can happen if the code doesn’t include all taxable income or benefits, leading to lower deductions than required.

• If you’ve overpaid, you’ll typically receive an in year tax refund through your salary once HMRC has all the necessary information to adjust your code.
• If you’ve underpaid tax it will usually be collected over time by a coding adjustment.

Other codes to look out for collect emergency tax from whichever income source they are used against.

Emergency codes normally have a W1, M1, or an X at the end and mean your tax is calculated solely on your current period’s earnings rather than your total year-to-date income.

The following contact information can be used to inform HMRC of changes in your circumstances or if you have queries:

• HMRC online services – app, personal tax account and digital assistant.
• Income tax helpline on 0300 200 3300 – (weekdays only and expect to wait on hold).