A coding notice tells your employer how many allowances you have so they can work out the tax to deduct from your wages/pension each time you are paid.
It's important to make sure that you have a code for an employer and that the details on the coding notice are accurate and up to date. If your employer doesn't have a code for you, they will deduct tax at the full rate of 20%.
If you only receive the personal allowance, and all your income has tax taken at source, then you won't be sent a coding notice each year, but your employer will still be told what your allowances are.
For 2019 the allowances are:
- Personal Allowance £11,000
- Age Related Allowance £ 450 (which you will receive if you are over the age of 64 at 1 January 2019)
If you do have other income or claim other allowances, you will receive a coding notice, for the following year, through the post in mid-November. This is so you can check the amounts that have been included and let us know if anything needs changing, before the employer is sent their information in December. For further details please see our Guide to Checking Your Coding Notice, which can be found in the download section of this page.
If you are unsure of the allowances you are entitled to, then you can find more detailed information in our Allowances Guide in the download section.
Please remember it is your responsibility to keep your coding notice up to date.
You can request a new Coding Notice here.
Frequently asked questions
How does my employer/pension provider use the weekly or monthly figures to calculate my tax?
- The easiest way to explain is by an example:
- Gross monthly pay £2,500
- Less monthly allowance £1,170
- Taxable pay £1,330 x 20% = £266.00 tax
- If you pay into an employers approved pension scheme otherwise known as superannuation, the calculations will be as follows:
- Gross monthly pay £2,500
- Less superannuation £ 120
- Less monthly allowance £1,170
- Taxable pay £1,210 x 20% = £242.00 tax
If my circumstances change do I need to notify you?
- It isn't always necessary to advise us of minor changes, unless you want to, but changes we do need to be informed of, are:
- Changes in employment, including additional jobs.
- If you start to receive a personal or occupational pension.
- If you start to receive an old age pension
- A new mortgage or major changes in the amount of interest paid, or if the mortgage is paid off.
- Marriage/Civil Partnership or Separation.
- If you start, increase or stop paying into a Retirement Annuity Trust Scheme or personal pension.
- Major changes to investment income.
- If you have a Charge of Child Allowance and you begin co-habiting with a partner.
- If you have a Dependant Relative Allowance and your child leaves higher education.
- If your income is £100,000 or greater
Do I need to tell you if my mortgage interest changes?
- Your code is based on the information we hold, and mortgage interest is difficult to estimate. If your interest rate for your mortgage has changed, or you have paid off some of it because you have inherited some money, we won't know unless you tell us. This would normally be when you complete your tax return in the following year, but by then it will be too late. If your code was wrong by a large amount then you may have over or under paid your tax, for example:-
- Your coding notice for a year shows mortgage interest of £6000. However if you had saved some money, and during that year paid off some of the mortgage which meant the interest paid was only £2500, you would have had £3500 too much in your code and would have paid £700 too little in tax (£3500 x 20% = £700).
- If you hadn't told us about the change as it happened, and left it until you completed your tax return for that year, when you get your assessment you will have a bill for the shortfall of £700, which will need to be paid within 30 days.
- Had you told us during the year, your code would have been changed and you would have paid the tax weekly/monthly as you got paid, and you would avoid the big bill that needs to be paid within 30 days.
- You don't need to tell us if the change is small, but you should let us know if the amounts are large.
Why didn't you update my Coding Notice?
- The information that we receive from you on your tax return is already out of date when we get it, as it relates to the previous calendar year. You are the only one who knows, for example, what your current mortgage rate is or if you have paid extra into your pension, and it is really up to you to keep us informed and keep your Coding Notice up to date. Please refer to the Coding Notice Guide for further information.
Why have I got a bill when I pay tax through my wages?
- The tax collected from your wages was too low, most probably because there were more allowances in your Coding Notice than you were entitled to. It could also be because you have other income that wasn't in your code; for example you started to receive an old age pension and didn't tell us. Please refer to the Coding Notice Guide for further information.
Why am I having tax deducted when my Coding Notice says '0'?
- A zero Coding Notice means you are not due any allowances, not that you don't need to pay tax. If you have a zero code then tax will be taken from your income at the rate of 20%. Please refer to the Coding Notice Guide for further information.
Why isn't the amount for my occupational/personal pension shown in the income section of my Coding Notice?
- Guernsey occupational and personal pensions have income tax deducted at source, so they don't need to be taken into account in this part of the code. This section only includes income that doesn't have tax deducted at source, such as your State old age pension, rental income or bank interest. Please refer to the Coding Notice Guide for further information.