Share this content
0
58883

Letter X on tax code?

Letter X on tax code?

I understand having a tax code with an X at the end means you are on a non cumulative tax code.

Can anyone explains whether this means you're more likely to underpay tax or not?

Reading through some material about it but unsure what consequences it actually has on an individual.

Thanks

Replies

Please login or register to join the discussion.

avatar
11th Aug 2014 14:53

Completely depends

There is not enough information in the opening post to answer this.  It depends on lots of factors:  other jobs, overlap of pay periods, adjustments to tax codes, if there was no income for a period of time, level of income, very large bonuses etc etc.

 

Maybe if you can provide more information?

Thanks (0)
avatar
By Kirkers
11th Aug 2014 15:01

Thanks

rjoconnor81 wrote:

There is not enough information in the opening post to answer this.  It depends on lots of factors:  other jobs, overlap of pay periods, adjustments to tax codes, if there was no income for a period of time, level of income, very large bonuses etc etc.

 

Maybe if you can provide more information?

 

Thanks, I didn't realise it was dependant on that many things.

I've got a few revision books I'm looking through (I'm a student) and it just listed different codes (T, X, L etc) and a tiny description next to them. In this case it just said it was non cumulative. I was just looking for a bit more info about what it would mean for a client. Haven't really had a lot of dealings with different tax codes so thought I'd enquire. It wasn't about an individual in particular.

Thanks (0)
11th Aug 2014 15:01

More likely to have underpaid

'X' means Month 1 or Week 1 basis, so your tax-free amount based on the code is divided by 12 or 52 and applied to your gross pay in that month or week.

The emergency code for a new starter without a P45, but who says that it is now his only job is 1000L Month 1, to avoid him being given his tax-free £10,000 for 5 months against his salary for only August, but for an existing employee, the usual reason for them to be put on a Month 1 code is if their code is being reduced, so that they will not be charged the arrears of tax for the previous 4 months.  Hence, they are more likely to have underpaid tax, unless the reason for the reduction of the code is a new source of income starting half way through the year - for example, a pension.

Thanks (0)
avatar
By Kirkers
11th Aug 2014 15:07

Spot on

Euan MacLennan wrote:

'X' means Month 1 or Week 1 basis, so your tax-free amount based on the code is divided by 12 or 52 and applied to your gross pay in that month or week.

The emergency code for a new starter without a P45, but who says that it is now his only job is 1000L Month 1, to avoid him being given his tax-free £10,000 for 5 months against his salary for only August, but for an existing employee, the usual reason for them to be put on a Month 1 code is if their code is being reduced, so that they will not be charged the arrears of tax for the previous 4 months.  Hence, they are more likely to have underpaid tax, unless the reason for the reduction of the code is a new source of income starting half way through the year - for example, a pension.

Perfect explanation as usual, Euan.

Many thanks - it makes a lot more sense now.

Thanks (0)
Share this content