Employees' tax codes
An employee's tax code is used by the employer to calculate how much ITIP to deduct from the employee’s remuneration.
The code, which will be shown on form T6 Listing of Employees' Codes issued by the Income Tax Division, consists of one, two, three or four numbers followed by a suffix letter: F, M or S.
There are also three non-numeric codes as follows:
- NT – no tax deducted;
- SB – no allowances, and tax to be deducted at the lower rate using Table D, with any excess taxed at the higher rate using Table C;
- HR – no allowances, and tax to be deducted at the higher rate using Table C
The purpose of the suffix letters F, M and S is to enable code numbers to be altered without the Division having to issue individual revised codes for each employee when changes to the levels of personal allowances are announced in the Budget.
Employees' codes can change during the tax year. Once an employer has received a new code for an employee, they should operate the new code for all payments made to that employee after the effective date shown on the notice. They should not recalculate the tax due in respect of previous payments.
Before the commencement of a new tax year a form T6 will be issued by the Division in mid-March, giving details of the codes to be used for each employee. These codes should be used with effect from the first pay day on or after 6 April. If, by the end of March, an employer has not been notified of the code to be used for any of their employees, they should contact the Division who will arrange for a code to be issued. In the meantime, if a code was issued for the previous year, the employer should continue to use the previous year’s code for any resident employee. However, if no code has been issued for the year in respect of a non-resident employee, the employer should not use any previous code, but should instead ensure that code HR is applied.
If an employer has not received notification of the code to be used for an employee by 5 April and has not completed form T20 Employee Commencing for that employee, they should complete and submit the form to the Division immediately. Until the code has been issued by the Division the employer should operate the emergency code applicable to the employee, including students and school children.
If the employer has not received a code for the student or school child they are employing, they must use the appropriate emergency code. If the remuneration is going to be greater than the free pay available under the emergency code, the employee should be asked to complete form R104 Resident Student Declaration. This will enable the Division to establish whether the total income for the year is going to be less than the single person’s allowance, in which case code NT will be authorised.
The emergency codes to be applied in cases where no previous code has been issued in respect of an employee are shown below.
| For Resident employees | Code | % |
|---|---|---|
| Person in subsidiary employment | SB | 10/22 |
| Person receiving state retirement pension | SB | 10/22 |
| All other cases | 1450S | 10/22 |
| For Non-resident employees | Code | % |
| All cases | HR | 22 |
