HMRC Tax code

 

Check my tax code

A tax code is a series of letters and numbers used by tax authorities, such as HMRC in the United Kingdom.  The calculation amount of personal tax account that should be deducted from an individual’s earnings or pension income. HMRC tax code determines the amount of tax-free allowance an individual is entitled to before income tax is applied.

In the UK, the tax code is usually provided by HMRC to employers or pension providers. Who then use it to calculate the correct amount of HMRC tax to deduct from an individual’s income. The tax code is specific to each taxpayer and can change from year to year based on various factors. Such as changes in personal circumstances or tax legislation.

The tax code is typically made up of several characters, with each character providing specific information. The most common elements of a UK tax code are as follows:

Numeric Value

This represents the tax-free allowance an individual is entitled to for the tax year. For example,  if the tax code includes the number “1257.” It means the taxpayer has a tax-free allowance of £12,570 for that tax year.

Letters

The letters in the tax code provide additional information or indicate specific circumstances that affect the tax calculation. Common letters used in UK tax code meaning and their meanings include:

  • L: Indicates that the taxpayer is eligible for the standard tax-free allowance.
  • M: Used when the recipient has received a marriage allowance from their spouse or civil partner.
  • N: Similar to “M,” it indicates that the recipient has transferred some of their personal allowance to their spouse or civil partner.
  • T: This letter is used when HMRC needs to review the tax code in more detail.
  • K: Indicates that deductions have exceeded the tax-free allowance, and tax should be paid on all income.
  • BR: Used when all income is taxed at the basic rate (20%).
  • D0: Indicates that all income is taxed at the higher rate (40%).
  • D1: Indicates that all income is taxed at the additional rate (45%).

For example, a my tax code like “1257L” means the taxpayer has a tax-free allowance of £12,570 for the tax year. It is eligible for the standard personal allowance.

It is important for taxpayers to check tax code regularly to ensure they are accurate and reflect their current circumstances. If there are any discrepancies or questions about the tax code, call HMRC about tax code.  You should contact HMRC or seek advice from a tax accountant. Incorrect tax codes could result in overpaying or underpaying taxes, leading to potential issues with tax liabilities or refunds.