Tax Codes with suffix A or H

Although tax codes with A or H suffixes ceased to be valid on 6 April 2003, the Inland Revenue is aware that they are still in use for some employees. If they appear on electronic P14 returns at the end of the 2004/05 tax year, the employer's submission will be rejected. It is also likely that most computerised payroll systems will no longer accept these suffixes as they are not supported by the Payroll Standard. The Inland Revenue has announced that, as a temporary measure, employers may change the suffix 'A' or 'H' to a 'T' so that the payroll software may be used. Nevertheless, employers that have employees with these wrong tax codes should immediately contact their tax office in order to obtain a replacement code. If a correct code is not obtained, the employee will pay the wrong amount of tax for the year.

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...back to 14 May 2004


Source: www.inlandrevenue.gov.uk/comp/notes-10-18.pdf

Bulk updates of tax codes

All L suffix tax codes will be increased in bulk from 6 April 2004, by 13 points, e.g. from 461L to 474L. However, P and V suffix tax codes, used for individuals who are over age 65 and who are entitled to the higher personal allowance and the married couple's allowance, are not increased in bulk each year, but by individual P9(T) coding notices. It is about five years since the P and V suffix codes were last increased in bulk.

We asked the Inland Revenue why these tax codes are no longer increased in bulk. The reply is as follows:

Suffix P and V both relate to allowances which are income dependent (i.e. if the income changes from year to year, then the allowance is adjusted accordingly). These cases therefore require manual input of information which can, and does, change from year to year. They therefore cannot be "increased in bulk" as suffix L can.

This answer relates to the special provisions in sections 257 and 257A of the Income and Corporation Taxes Act 1998, where the personal and married couple's allowances are defined. Both of these allowances, where they relate to persons over the age of 65 are subject to an income limit, i.e. £18,300 for 2003/04 and £18,900 for 2004/05. Where a person's income exceeds the limit, the allowances are reduced by a half of the excess, but not to less than the standard personal allowance (i.e. £4,615).

Example: For the 2003/04 tax year, a person over age 65 has total income of £20,000. This is £1,700 over the income limit. The age-related personal allowance for persons over 65 is £6,610. This would be reduced by £850 (half of £1,700) to £5,760, and the tax code would be based on this figure.

If a person is also entitled to the married couple's allowance, the amount of the age-related personal allowance is reduced first down to the standard personal allowance, and then any further reduction reduces the married couple's allowance, but to not less than £2,150.

Example: For the 2003/04 tax year, a person over age 65 has total income of £35,000. This is £16,700 over the income limit. The age-related personal allowance of £6,610 is reduced to £4,615, by using up £3,990 of the excess (i.e. half of £3,990 is £1,995, the difference between £6,610 and £4,615).

The remaining excess is 12,710. As half of that, £6,355, would wipe out all of the married couple's allowance, the married couple's allowance is reduced to the minimum amount of £2,150.
...back to 27 February 2004

Out of date tax codes

The Inland Revenue has issued a reminder to employers that, if they are still using suffix tax codes ending "A" or "H", they should contact their Inland Revenue office immediately to obtain a revised coding. These tax codes went out of use at the start of the current tax year when the tax allowance known as Children's Tax Credit was abolished and replaced by direct payments of Child Tax Credit.
(Source: www.inlandrevenue.gov.uk/employers/stoppress.htm )
...back to 28 November 2003

Tax code suffices

The P7X instructions accompanying the Budget Pack shows bulk updates of tax codes with A and H suffices. These codes have been given new significance with the introduction of the Children's Tax Credit (CTT). Both suffix codes now relate to basic rate taxpayers, under age 65, claiming the CTT; code A to those claiming half of the credit, code H to those claiming the full credit.

For example, tax code 554A, for basic rate taxpayers claiming half of the CTT, will increase by 18 points to 572A from the first pay day after 17 May, i.e. week 7 or month 2. Tax code 654H, for those claiming the full CTT, will increase by 36 points to 690H.

Suffix code T will, in future, be used for:

• employees receiving the married couple's allowance that formerly had A or H suffix codes
• higher rate taxpayers, under age 65, claiming CTT
• some starter rate taxpayers, under age 65, claiming CTT
• other employees with temporary codes.
- Payroll Briefing 199 - 17 April 2001