My client does his own PAYE, but he's just received his new tax code and asked me what it means. I haven't got a clue as I dont offer a payroll service.
I need to know what a 'K' code is? Can anyone help me please?
Thanks
Sundance
Accountsguy said
Thu May 10 16:11 2007
Hi Sundance, A K code simply indicates how much must be added to your clients taxable income. If your clients deductions (untaxed income on which tax is still due) are more than his allowances hell be given a K code, to ensure he pays tax on the excess. The excess tax due is divided by 10 and added to the letter K. So, whereas with other tax codes the number indicates the amount of income a person can have tax-free, the number in a K code indicates how much must be added to to taxable income. Guy
Sundance said
Thu May 10 19:31 2007
Thanks Guy. At least I can now attempt to explain the basics!
I need to know what a 'K' code is? Can anyone help me please?
Thanks
Sundance
A K code simply indicates how much must be added to your clients taxable income. If your clients deductions (untaxed income on which tax is still due) are more than his allowances hell be given a K code, to ensure he pays tax on the excess.
The excess tax due is divided by 10 and added to the letter K. So, whereas with other tax codes the number indicates the amount of income a person can have tax-free, the number in a K code indicates how much must be added to to taxable income.
Guy
Sundance