Chapter 3 - 3.6 - Coding Notice

Question 1

Why do HMRC issue a tax code?

Answer 1

To enable the employer to deduct the correct amount of tax from each employee

Question 2

What does the tax code incorporate?

Answer 2

The deductions and allowances available to the individual

Question 3

What two forms does HMRC issue in relation to each employee’s tax code?

Answer 3

• Form P2
• Form P9

Question 4

What is form P2?

Answer 4

Form P2 is sent to the employee and gives detail of how the PAYE code has been calculated

Question 5

What is form P9?

Answer 5

Form P9 is sent to the employer and gives the PAYE code only

Question 6

What does the employer’s payroll software do?

Answer 6

Spreads an employee’s allowance evenly over the tax year