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Negative Tax Code

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NameWithheld
NameWithheld Posts: 147 Forumite
Fourth Anniversary 100 Posts Name Dropper
edited 28 March at 12:04PM in Cutting tax
I have just received a negative tax code for the coming year, K371. Never had a negative code before. How do I work out how much tax should be deducted, i.e. how much income should be taxed at basic rate.

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  • Dazed_and_C0nfused
    Dazed_and_C0nfused Posts: 17,627 Forumite
    10,000 Posts Fifth Anniversary Name Dropper
    I have just received a negative tax code for the coming year, K371. Never had a negative code before. How do I work out how much tax should be deducted, i.e. how much income should be taxed at basic rate.
    It's still £37,700, your code doesn't change that.  It's something your employer does automatically.

    Your issue is that the first £3,719 of that is being used by your negative tax code allowances so only £33,981 of your actual pay or pension is going to have basic rate tax deducted.  The other £3,719 is basic rate tax deducted of income you haven't been "paid" as such (by your employer/pension payer).
  • chrisbur
    chrisbur Posts: 4,251 Forumite
    Part of the Furniture 1,000 Posts Photogenic Name Dropper
    Works in the same way with PAYE as a normal tax code except that instead of deducting from your taxable income the figure is added to it.  For example code 1257L you deduct 12579 from taxable income, with K371 you add 3719 to taxable income.
  • NameWithheld
    NameWithheld Posts: 147 Forumite
    Fourth Anniversary 100 Posts Name Dropper
    Thanks. Prior to starting this thread I had put the numbers in a spreadsheet, and you comments confirmed that I had done it correctly 
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