A personal tax code indicates the amount of salary that an employee will earn in any tax year without statutory deductions. For payroll purposes, the amount is divided into either 52 weekly or 12 monthly segments.  A personal tax code (as the name suggests) is specific to an individual. So for example, a tax code is often seen as 533L – this means that you can earn up to £5330 per annum before tax is paid. You must remember though that this is then divided by 52 (weekly) or 12 (monthly) so becomes the amount you can earn each period before tax is paid.

A P45 is a statement of earnings and tax payments from a previous employer and is needed to ensure you are on the correct tax code when you change jobs. If no P45 is available then a P46 can be issued to receive a full code from the tax authorities. Parasol can assist with this and explain how a P46 affects your early payments.