Tax codes

All staff and contractors receiving schedular payments must complete a tax code declaration. This tells the employer the rate of PAYE to deduct or any student loan repayments.

Tax code declaration

Employees and contractors liable for withholding tax must complete a tax code declaration when they start working for an employer. This will include their tax code. If this is not done, the employer must deduct PAYE or withholding tax at the no-declaration rate.

No-declaration rate

Employers must use the no-declaration rate to deduct tax for all staff who have not fully completed a tax code declaration (IR330).

Primary employment

Employees with a job that is their main or only source of income must use a primary tax code for that job. Only one primary tax code can be used at a time.

Secondary employment

If an employee has more than one job, any jobs that are not their main income source are known as secondary employment. The employee must complete a separate tax code declaration form for each secondary job using a different tax code to their main employment.

Special tax codes

Some employees will have a special tax code or deduction rate (IR23) certificate. This tells the employer what deductions to make from their salary or wages.

Date published: 16 Sep 2004

Back to top