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HMRC must determine for each employee (including a pensioner) a code for a tax year which their employer (or pension provider) will use to calculate the amount of tax to be deducted from payments of PAYE income¹.

In determining the code, HMRC must take into account the reliefs to which the employee is entitled for the year concerned, so far as title to them has been established at the time the code is determined².

Historically, the nature of the PAYE regime was such that there could be many months delay in a change occurring and that change being reflected in an employee's code. This delay has been reduced to an extent by the introduction of RTI (see E4.1104). However, benefits and expenses provided to an employee are notified to HMRC via the P11D due to HMRC by 6 July following the end of the tax year to which they relate (see E4.11124), unless voluntary payrolling of benefits has taken place (see E4.1115). If the benefits had not been provided in a previous