Tax Code Change FAQ's

Why has my employee’s tax code changed?

Unfortunately, we are not informed of the reason for any change to an employee’s tax code and there are a number of potential reasons for changes. If your employee does not feel that this is correct, they can contact HMRC on 0300 200 3300 to query or update this.

How will the change affect future payslips?

If you would like to see how this will affect the next payslip please contact the team and we will be happy to send you an advanced copy of your next payslip.

What is the standard full tax-free allowance?

The full tax-free allowance for the 25/26 tax year is represented by a 1257L tax code. However, some employees have an allowance greater than this due to additional allowances (e.g. for uniform).

Will this affect my total costs?

If you are on a gross agreement, then this will not have an impact on your total cost. You will pay a different amount to HMRC and your employee in their net pay, but your quarterly tax bill will be updated to adjust for the difference.

If you are on a net agreement, then this can affect your costs. You may end up paying more or less in overall total cost depending on the tax code.

Please contact the team if you are unsure whether you are on a net or gross agreement, or if  you would like to understand the total cost changes if you are on a net agreement.

My employee has informed me that they have already changed the code to something different

Due to HMRC needing to process and send us new codes, this may not be the most up to date code on their system if your employee recently changed this. Once the newer code is received we will update the payroll accordingly.

When will the tax code change take effect?

This will be effective from the next payslip.

Do I need to inform my employee of the change in their tax code?

HMRC will inform employees of a change in their tax code separately either via letter or online through your employee’s government gateway account.