Is your total income is above £100,000?

If your total income (employment income, benefits and investment income) exceeds £100,000, your tax free Personal Allowance begins to reduce. This means that you will receive less tax-free income than you may have expected, resulting in additional tax becoming payable.

The income means tested reduction to the £12,570 personal allowance was introduced from 6 April 2010 but, even 16 years, taxpayers who earn in excess of £100,000 are still being impacted by this.

For example, if your annual salary is below £100,000 your PAYE code is likely to be 1257L (the code that allocates a full personal allowance for the year). If you were to receive a bonus of, say, £10,000 in February or March, your total income for the year would be above £100,000 but your PAYE would likely have been underwithheld. Without taxpayer intervention, this pattern may continue for a couple of tax years until your total income rises above £125,140 consistently.

Are there any other tax effects if I earn over £100,000?

For working parents, it is also important to note that if either parent earns above £100,000 this can affect eligibility for certain Government childcare support payments, including Tax-Free Childcare (£2,000 per child per year to pay for nursery, wrap around care or holiday clubs) and Free Childcare for Working Parents (30 hours nursery funding).

Do you have have taxable benefits shown on a P11D?

HMRC may adjust your tax code to collect tax on benefits such as:

• private medical insurance;

• company cars;

• employer-provided accommodation;

• other taxable benefits - low cost loans, dental insurance etc.

Your PAYE code may not account for P11D benefits in the first year that you receive them from your employer. Again, without taxpayer intervention, it may take a couple of tax years for your P11D benefits to be correctly added to your PAYE code.

Have your circumstances have changed from prior years?

Your tax code may be based on information from a previous tax year. Changes such as a new employer, a change in salary, pension income, rental income or investment income can all affect whether your PAYE deductions are accurate.