Why has my tax code changed from K63 to K183? Your questions answered

They asked: "Could you tell me why my tax code has changed from K63 to K183?"

A tax code with K at the beginning means a person has income that isn't being taxed another way, and it's worth more than their tax-free allowance.

The Government explains that for most people with this tax code, it happens if they're paying tax they owed from a previous year through their wages or pension, or getting state or company benefits which the person must pay tax on.

Stevie Heafford, tax partner at HW Fisher, explained: "Each digit in the K code represents £10 so, with a K63 code, an extra £630 is being taxed.

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"As this has now increased to K183, an extra £1,830 is being taxed, an increase of £1,200.

"This will be due to HMRC estimating an increased figure for Benefits in Kind, a reduced figure for allowable expenses or including a figure in the coding notice for tax underpaid in previous years (sometimes if there is a small underpayment for a tax year, this is 'coded out' rather than the taxpayer having to pay it in cash).

"The reader should check the documentation which came with the updated coding notice as that should set out how the K code has been arrived at.

"The code can also be checked online."

HMRC tells employers and pension providers what tax code to use.

It is then used by the employer or pension provider to work out how much income tax to take from the pay or pension.

HMRC has launched an online tax code checker service, to help people work out what their tax code means.

The user needs to state which country they live in and then input some information about tax codes.

The tax code 125L is currently the most common tax code.

This means they can earn £12,570 before being taxed.

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PAYE taxpayers should receive a paper copy of the coding notice (p2) or get a notification to check their Personal Tax Account online to view the code.

It's important to check one's tax code is correct, Heafford warned.

She said: "If you have multiple employments or pensions you could receive several different coding notices.

“As the PAYE code is the basis for the tax deducted on your pay slip, if it is incorrect the wrong amount of tax will be deducted. This could lead to either an underpayment or an overpayment.”