An introduction to HMRC tax coding and student loan change notices

This article provides an introduction to what HMRC tax coding and student loan change notices are, why you might receive one of these notices from HMRC, and how to access them in FreeAgent.

Ensuring your employees’ details are up to date in FreeAgent helps keep your payroll accurate, so it’s important to check your staff’s HMRC tax coding and student loan change notices regularly by requesting them from HMRC.

This article contains the following topics. Select a link to skip straight to that section.

• What are HMRC tax coding and student loan change notices?
• Why might you receive a notice from HMRC?
• How to access HMRC notices in FreeAgent
• Enabling electronic tax coding and student loan change notice notifications

What are HMRC tax coding and student loan change notices?

An HMRC tax coding notice is a notification sent by HMRC to employers when an employee's tax code changes in a tax year. A notice to change the student loan will be sent when an employee's student loan repayment status changes. A new notice is sent each time there is a change. The employee also receives a copy of the notice.

Within the FreeAgent app, we refer to these two kinds of notices simply as ‘HMRC notices’.

Why might you receive a notice from HMRC?

HMRC may send you a notice to update your tax code, with a copy going to your employer, if:

• you start to get income from an additional job or pension
• your weekly State Pension amount changes
• your employer tells HMRC you have started or stopped getting taxable benefits from your job, such as a company car
• you get taxable state benefits
• you claim Marriage Allowance
• you claim expenses that you get tax relief on

You may also be put on an emergency tax code if you change jobs.

HMRC may also send you a notice if:

• your student loan repayment status changes
• your postgraduate loan repayment status changes

How to access HMRC notices in FreeAgent

Navigate to the ‘My Money’ tab at the top of the screen and select ‘Payroll’ from the drop-down menu.

Select ‘Check HMRC notices’ in the top-right. Please note that you’ll need to have enabled electronic tax coding and student loan change notice notifications in your HMRC business tax account.

Within the HMRC notices area of FreeAgent, you’ll see various tabs. These are ‘For approval’, ‘Unmatched’, ‘Upcoming’, and ‘History’.

For approval

This is the default view for your HMRC notices area that will show you all the notices that you have yet to approve. Approving a notice will automatically update the employee’s tax code in their payroll profile in FreeAgent and on any as-yet unfiled payslips.

Read about how to approve or remove an HMRC notice.

Unmatched tab

The Unmatched tab will show you any notices that haven’t been matched to an employee yet. A notice will be unmatched if the National Insurance number on the notice doesn’t match a payroll profile in FreeAgent.

Once you’ve updated an employee’s payroll profile or created a new profile to match the National Insurance number on a notice, that notice will automatically move to the ‘For approval’ or ‘Upcoming tab’.

Upcoming

The Upcoming tab will show you any notices that have an effective date after the next payroll date. These will require no immediate action and will move to 'For Approval' when applicable.

History

The History tab will show you a record of the HMRC notices that have been received and the actions taken. Read more about how to view a history of HMRC notices.

Enabling electronic tax coding and student loan change notice notifications

To check for HMRC tax coding and student loan change notices using FreeAgent, you need to enable electronic notifications for these notices in your HMRC business tax account. You can do this by following these steps:

1. Log in to your HMRC business tax account and select ‘Messages’.
    
2. Select ‘PAYE for employers messages’.
    
3. Select 'Change how you get tax code and student loan notices'.
    

4. Select ‘Yes’ for all notice types that you want to receive online and select ‘Next’.

   
    

5. Select ‘Submit’ to complete the process. 

Please note that only notices issued after you update these settings will be pulled through to FreeAgent, and it may take up to 72 hours for the changes to apply.