List of Tax Codes in New Zealand - Guide for Employers

If you’re running payroll for your company and you have international workers, you may need to learn about tax codes in different countries. You don’t necessarily need to know everything about how the tax system works, but a working knowledge of the relevant tax codes can be really helpful.

In this guide for UK employers, we’ll be taking a look at tax codes in New Zealand. This includes what tax codes mean in New Zealand and how they work, plus a list of common tax codes you’re likely to come across.

We’ll also cover secondary tax codes, the concept of which may be unfamiliar to UK employers.

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Tax codes NZ - What do tax codes mean in New Zealand?

Tax codes are a way of telling an employer how much tax to deduct from an employee’s pay. They’re part of the Pay As You Earn (PAYE) system, and work in a very similar way to tax codes in the UK.

Every person in New Zealand who receives a salary or other wages, income-tested benefits or pensions will have a tax code.

It’s the employee’s responsibility to provide their tax code when joining a company or organisation.

But employers of people working in New Zealand still need to make sure that they’re using the right tax codes when running payroll. If the wrong code is used, it could result in the underpayment or overpayment of income tax, student loans and other contributions.

If your business is based in the UK but employs workers in other countries, it can be tricky to manage payroll and tax. You’ll need to understand your obligations with regards to tax codes, reporting and remitting tax, and this can be very complicated.

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How do Inland Revenue NZ tax codes work?¹

In the New Zealand tax code, there are two tiers of tax codes - primary and secondary.

Most employees have just one job, so only need a primary tax code. But for workers who have two jobs, they will also have a secondary tax code in addition to their primary tax code.

When starting a new job, employees need to complete a form called a Tax Code Declaration - IR330. If they have both a primary and a secondary tax code, they’ll need to complete an additional IR330 form for the second job and tax code.

Employers use the notes on the IR330 form to work out the correct tax code. They can then use the Inland Revenue’s online PAYE calculator to work out how much tax to deduct from each pay cycle.

It’s really important to ensure that employees are on the right tax codes, in whatever country they’re based in. Get it right, then you can use international payroll tools to ensure that everyone gets paid on time.

List of tax codes NZ

Tax codes in New Zealand are quite short, and are only made up of letters. For example, M, ME or M SL. This is unlike in some other countries such as the UK where tax codes are made up of both letters and numbers.

To help make payroll just a little easier for you as a UK employer, here’s a quick look at some of the most commonly used primary and secondary tax codes in New Zealand:²

What are secondary tax codes in NZ?

As you can see from the table above, there are a number of secondary tax codes in New Zealand. These are for people with second jobs, which aren’t their main source of income.

For example, if a person has a weekend bar job in addition to their 9 to 5 office job. In this case, the employee will have two tax codes - one for each job and employer.

Pay employees abroad with Wise Business

Income tax can be complicated, but paying your staff doesn’t have to be. If you have employees spread across New Zealand, the UK and other countries worldwide, you can pay them all quickly and easily using Wise Business.

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After reading this guide, you should have a better understanding of how New Zealand tax codes work.

It will always be complex to get tax right, especially when you’re hiring across international borders. But getting to grips with tax codes is an important first step to running payroll effectively.

Sources used for this article:

Sources checked on 31-Oct-2023.