Tax codes

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

Tax code declaration

Employees on salary or wages and contractors must complete a Tax code declaration form (IR330) when they start working and give this to their employer. The IR330 will show the tax code the employer will use to deduct PAYE or tax on schedular payments. If there has been no IR330 completed, the employer must deduct tax at the no-notification rate.

No-notification rate

Employers must use the no-notification rate to deduct tax for all employees or contractors who have not fully completed a Tax code declaration (IR330) or who have not provided a valid IRD number.

Primary (main) employment

Employees with a job that is their main or only source of income must use a main tax code for that job. Only one main 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 certificate. This tells the employer what tax deductions to make from their salary or wages. If the employee has a student loan, the special tax code certificate may also include a special deduction rate.

Student loan extra deductions

Employees can request extra deductions to be made from their salary or wages so they can repay their student loan faster. We can also ask you to make compulsory extra deductions, to catch up on an underpayment that has occurred in the employee's student loan. Extra deductions are in addition to the amount that is normally deducted for an employee who uses a "SL" repayment code.

Student loan repayment deduction exemptions

Employees who are studying full-time may give their employer a repayment deduction exemption certificate, which means the employer does not need to make student loan deductions from their salary or wages. Employees with repayment deduction exemptions do not need to use "SL" repayment codes.

Student loan special deduction rates

Some employees may give their employer a special deduction rate certificate which shows a reduced rate to be used for the student loan deductions. This rate replaces the repayment deductions that would normally be required.

Date published: 16 Sep 2004

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