UK Postcodes
The UK postcode is a combination of between five and seven letters and numbers which define four different levels of geographic unit. It is part of a coding system created and used by the Royal Mail across the United Kingdom for sorting mail.
The postcodes are an abbreviated form of address, which enable a group of delivery points (a delivery point being a property or a post box) to be specifically identified.
Full valid postcodes can be located at the Royal Mail Postcode finder website (click on the Find an address image above).
Each postcode consists of two parts. The first part is the outward postcode, or outcode. This is separated by a single space from the second part, which is the inward postcode, or incode. The outward postcode enables mail to be sent to the correct local area for delivery. This part of the code contains the area and the district to which the mail is to be delivered.
The inward postcode is used to sort the mail at the local area delivery office. It consists of a numeric character followed by two alphabetic characters. The numeric character identifies the sector within the postal district. The alphabetic characters then define one or more properties within the sector.
The postcode: Employee payroll records and HMRC
The UK postcode is an important piece of data in the exchange between employers and HM Revenue and Customs (HMRC).
It is important that employers collect and apply the postcode in the operation of payroll. Employers are asked to check the postcode is correct as if an incorrect post code is used, this could result in the employee’s address being changed on HMRC systems leading to correspondence being issued to the wrong address.
Also it is part of data matching helping prevent the creation of duplicate records causing misbalances on employers accounts,.
For overseas based employees who do not have a UK postcode, the employer must report the name of the foreign country where the address applied is located.
Freeport’s and Investment Zones
From 6th April 2025, eligible employers operating in a designated special tax site who wish to claim the employer National Insurance contributions relief are required to provide the workplace postcode for each eligible employee within the RTI Full Payment Submission.
HMRC will publish updated guidance on this new requirement on 6th April 2025. This will be available at check if you can claim National Insurance relief in UK Freeport or Investment Zone special tax sites
To find out more:
- Investment Zones in England
- Investment Zones in Wales, Scotland, Northern Ireland
- Guidance on Freeports
PAYadvice.UK 2/4/2025