What Are Tax Codes?

[ankita]

I keep hearing about tax codes, but I’m not exactly sure what they mean or how they affect my income and taxes. Can someone explain what a tax code is, why it’s important, and how I can find the correct one for myself?

 

[danisjohn]

Tax codes are alphanumeric codes issued by a country’s tax authority to indicate how much income tax should be deducted from an individual’s earnings. In the UK, tax codes reflect personal allowances, benefits, or other income adjustments, helping employers calculate the correct amount of tax through the PAYE system.

 

[peterkavinsky]

Tax codes are identifiers used by tax authorities to show how much income tax should be deducted from your earnings.

 

[Mayank]

Tax codes are unique numerical or alphanumerical references issued by tax authorities to identify how much income tax should be deducted from an individual’s earnings. They ensure correct tax collection, reflect allowances, and prevent overpayment or underpayment.

 

[Shane Warne]

Tax codes are a set of numbers and letters used by tax authorities to show how much income tax should be deducted from your earnings. They reflect factors like personal allowances, benefits, or deductions. Correct tax codes ensure you pay the right amount of tax.

 

[nikhilrajoria]

A code of letters/numbers that shows the amount of income tax you need to deduct from your salary imposed by the tax authorities. Example: in the UK, a typical tax code is 1257L.