PAYE Notice of Coding

A PAYE Notice of Coding – also known as form P2 – is a letter sent by HMRC giving you your tax code and outlining the reasons you were given this tax code. Knowing your tax code is important because your employer deducts tax from your salary through the Pay As You Earn (PAYE) system, as well as your eligibility for a Personal Allowance.

It’s important to double check that all of the information and the tax code listed on your PAYE Notice of Coding is accurate. If your tax code is incorrect, you might be paying the wrong amount of tax. The most common tax code in the 2023/2024 tax year is 1250L.

For more information about tax codes, read our helpful glossary page giving more detail!

Frequently Asked Questions

  • How does PAYE work?

    PAYE (short for “Pay As You Earn”) is a way of paying Income Tax and National Insurance through your salary if you’re an employee. Your employer will do this automatically for you based on your tax code, then send the taxes over to HMRC.

  • What is a Personal Allowance for income tax?

    You only have to pay Income Tax on the income above your Personal Allowance, which is a tax-free allowance that everyone in the UK has. In the 2023/2024 tax year, the Personal Allowance is £12,570.

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