Ostroff, Fair and Company
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What does k mean on your tax code eg k432?


What does k mean on your tax code eg k432?

I found this website really useful:

http://www.direct.gov.uk/moneytaxandbene...
k stands for additional tax
A "K Code" is often referred to as negative tax allowance, or additional tax. It occurs normally when you have a taxable benefit (such as a company car), the value of which is more than your normal tax allowance. For example, if your company car was worth 拢10000 for tax purposes, you would deduct this from your tax allowance of 拢5039 (for 2006-2007 tax year) and this would leave you with -拢4961 or K496. What happens is that when your wages are calculated, instead of deducting your monthly allowance of 503L form your gross pay, the K496 amount is added to your gross pay and then taxed at normal rates. This then allows you to pay tax on your company car without having to pay lump sums at the end of the tax ear, like in some other countries.

Hope that helps.

Adam
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