If you are a UK taxpayer then for the tax year 2011-12 the personal allowance for the year is £7,475. However, most people who are under the PAYE scheme (pay as you earn, where your tax is deducted by your employer), will be sent a tax coding notice from HM Revenue to advise you of your own specific tax allowance.

In the majority of cases, this tax allowance will equal the UK personal allowance as above, but for some people it will not be the same number and there are a few reasons of why this may be.

• You may owe some tax from the previous tax year. If the amount of tax that you owe is not large then HM Revenue will not ask for repayment but instead will adjust your tax code to save you from having to pay back a lump sum in one go.
• You may have untaxed earnings from elsewhere or you may be receiving a state pension in addition to your earnings.
• You may have other taxable benefits, for example a company car which is taxable.

There are a few reasons why you may not get the straight personal allowance and changing your tax code allows the revenue to collect the correct amount of tax over the tax year without either party having to find a lump sum to pay out.

If you think your tax code is incorrect or you do not understand it then contact your nearest tax office.