Introduction to Income Tax and NICs Pay As You Earn and income tax
5.6.1 Marriage Allowance
The Marriage Allowance was introduced from April 2015 and is available to spouses and civil partners born after 5 April 1935. Its formal name is the Transferable Tax Allowance. Spouses or civil partners who are basic rate taxpayers can apply to HMRC to transfer £1,260 (set as 10% of the current basic Personal Allowance, rounded up) from their Personal Allowance to their partner, who must also be a basic rate taxpayer.
Following a successful application, HMRC notifies the employers about the revised Personal Allowances.
5.7
Tax codes
Tax codes play a very big role in the operation of PAYE and the calculation of income tax due on an employee’s earnings.
5.7.1 Sources of tax codes
There are several ways in which an employer can receive a tax code allocation for an employee. A common way is through the form P45 on joining. Another is for HMRC to issue an official ‘notice of coding’ (with a copy to the employee on form P2) to the employer . This notice of coding is usually referred to as a ‘P6 notice’ but can sometimes be issu ed as a ‘P9 notice’. HMRC also notifies employers electronically, through their online Business Tax Account. Note that a P6 notification from HMRC can also include figures for previous taxable earnings to date and previous tax paid to date. These replace the figures in the payroll system, where necessary.
If more than one coding is received in the pay period, then use the one with the latest date of issue.
There are circumstances where the employer has to determine the tax code to use. These occur when for example there is a payment to a new employee. The rules on determining the code are precise. HMRC normally issues an annual ‘blanket’ code change on form P9X. It is not uncommon for further tax code changes to be notified to employers after the Budget. Form P7X is used for this purpose. Forms P9X and P7X will typically require the numeric part of certain tax codes (determined by the suffix letter) to be increased (or, exceptionally, decreased).
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