Britain is the odd one out
Every payroll system has to answer the same question before it can pay anybody: how much tax comes off. What differs, and differs more than people expect, is who answers it.
In the United Kingdom, HMRC works it out and issues a tax code straight to your employer. You are never asked to complete anything and most people never see the coding notice. In the United States, Canada and Australia the form is put in the employee's hands and the employer does what it says.
That single difference decides what a withholding problem even is. A British one is a code somebody else got wrong, which you then have to persuade HMRC to change. An American or Canadian one is usually your own form, which you can replace tomorrow.
| Market | What it is called | Who fills it in | Tool |
|---|---|---|---|
| United Kingdom | Tax code, e.g. 1257L | HMRC. The employee never fills anything in | Tax code checker |
| United States | Form W-4, Employee’s Withholding Certificate | The employee | W-4 withholding checker |
| Canada | Form TD1, federal and provincial | The employee, twice | TD1 checker |
| Australia | Tax file number declaration | The employee, increasingly through ATO online services | TFN declaration checker |
What happens if you do nothing
This is the most useful comparison on the page, because doing nothing is extremely common and the consequence is wildly different depending on where you are standing.
- United Kingdom: you are coded regardless. On a new job with no P45 that is usually an emergency code, which taxes each period in isolation and over-taxes a first payslip.
- United States: withheld as a single filer with no adjustments. No dependants, no deductions, no allowance for a joint return. The harshest default of the four.
- Canada: you still get the basic personal amount, estimated by your employer from what they pay you. The gentlest of the four by some distance.
- Australia: not supplying a tax file number means withholding at a penalty rate, which is the one place where silence is actively expensive.
So the same inaction produces a mild inconvenience in Ottawa and a serious over-deduction in Ohio. Anybody who has moved between these countries and is working from what they learned in the last one is very likely to be wrong.
The failure modes are different too
Because the forms differ, so do the mistakes. Each of these is the leading error in its own market.
In the UK it is a code nobody explained: a K code that looks like a punishment and is not, or an emergency suffix nobody mentioned. The reassuring part is the 50% overriding limit, which stops any code taking more than half your gross pay in one period.
In the US it is Step 2 of the W-4 in a two-earner household. The Step 2(c) box goes on both jobs' forms while Steps 3 and 4(b) go on one, and almost every guide merges those into a single instruction. The result is under-withholding all year and a bill in April.
In Canada it is the second TD1. Most people fill in the federal form, never see the provincial one, and lose every credit beyond the provincial basic amount for a whole year.
In Australia it is claiming the tax-free threshold from more than one employer at the same time, so that each job behaves as though it were the only one.
Which is why these are four tools
A single calculator with a country dropdown would be subtly wrong everywhere at once. The fields are not the same fields, the defaults are not the same defaults, and the words people search are not the same words. Nobody in Chicago has ever searched for a tax code, and nobody in Leeds has ever searched for a W-4. Four instruments, four pages, one comparison.
Common questions
Why does my UK employer not ask me to fill in a withholding form?
Because in Britain the government issues the instruction directly. HMRC sends a tax code to your employer and you are never asked to complete anything. That is genuinely unusual: the US, Canada and Australia all put the form in the employee’s hands. It is why a British withholding problem is something you have to get HMRC to correct, while an American or Canadian one is usually a form you filled in yourself and can fix by handing in a new one.
What happens in each country if I fill in nothing at all?
The defaults could hardly be more different. In the UK you are coded anyway, though often on an emergency code that over-taxes a first payslip. In the US you are withheld as a single filer with no adjustments, which is the harshest treatment available. In Canada you still receive the basic personal amount automatically. In Australia, failing to supply a tax file number means withholding at a penalty rate. Advice written for one country transfers badly to the others.
I moved from the UK to the US. What is the equivalent of my tax code?
Form W-4, but the direction of travel is reversed. Nobody will send you a code. You complete the W-4 and give it to your employer, and if you do not, you get the least favourable treatment rather than a sensible default. The most common expensive mistake is in Step 2 with two earners in a household.
Why are there two forms in Canada and one everywhere else?
Because Canada taxes at two levels and each sets its own credits. The federal TD1 covers federal amounts and a separate provincial or territorial TD1 covers the provincial ones, required once your federal claim exceeds the basic personal amount. Which province is not obvious either: an employee uses their province of employment, a pensioner their province of residence.
Why not one tool with a country dropdown?
Because these are four different instruments rather than four translations of one. A tax code is issued to you; a W-4 is completed by you; a TD1 is completed by you twice. They have different fields, different failure modes and different defaults. A single tool with a dropdown would be subtly wrong in every market at once, and it would rank for none of the terms people search, because an American looks for W-4 help and never for "tax code for the United States".