A code issued by HM Revenue & Customs which is used to calculate the amount of tax an individual should be paying each year. The tax code is found on a P45, which is handed out when an employee leaves their job or on the PAYE coding notice, which is sent out at the start of each tax year. Each tax code is made up of a letter and several numbers, for example 747L. Taxpayers can find out how much income they can earn in a year before paying tax by multiplying the number in their tax code by 10. The letter indicates which category the taxpayer falls into, for example P is for people aged 65 to 74 and eligible for the full personal allowance.
This definition is for general information purposes only