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CODE Magazine - 2003 - May/June

This is called a personal tax allowance. A tax code is a way of dividing this tax-free income over the whole year.

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If it was not done this way, you would pay no tax for the first few months and then for the rest of the tax year all your income would be taxed. So a tax code is a sensible idea; it spreads your tax free allowance evenly over the year. But tax codes can, and do, go wrong. For example, most older people have a higher personal tax allowance and they went up by quite a lot this year.

These higher allowances apply from 6 April before your birthday. But the Revenue does not give it you automatically from the start of the tax year.


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Instead it waits until you reach 65, then it writes to you to confirm your age and income, then it adjusts your tax code. The result is you pay too much tax in the months before your birthday and too little in the months after. If the Revenue gets its sums right, you should end up paying the correct amount of tax over the whole year. The reason for this strange procedure is that the higher allowances are not given to everyone from age The Revenue argues that if it gave the higher allowance automatically just on your age, some people would be paying too little tax.

So it writes and waits for an answer. If you want to pay the correct amount of tax from the start of the tax year you have to contact the Revenue to ask for your code to be adjusted. It is not just people aged 65 or more who can be given the wrong code. It may also be wrong if you have a source of income that is paid gross without tax being deducted or if you have paid too much or too little tax in the past and it is being adjusted by changing your code.

And of course it can be wrong if you have a 65 th or 75 th birthday during the tax year,. Check your code So when you get your tax code, check it carefully. Make sure you understand what each number represents and that the arithmetic is correct. Remember, the lower your tax code the more tax you pay.

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The tax code consists of a number and a letter. The number is the amount of money you can have tax-free in the year with the last digit removed. In other words you have untaxed income which is more than your tax-free allowance and the extra tax is collected by taxing your pay or a pension from your job at more than the basic rate of tax.

If you have more than one company pension, or a pension and a job, then the code will be applied to the higher income. Your lower source of income will be taxed in full, without any tax-free allowances. Six highly accomplished educators tell why they became engineers. A new online collection of hands-on engineering lessons and activities is up and running. Between , applications from abroad to U. The engineering department at the University of Texas-San Antonio has done an impressive job of attracting minorities to its program.

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Tax codes and tax back

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