Your UK tax code is a combination of letters and numbers that tells your employer how much Income Tax to deduct from your pay. It is also used to calculate your National Insurance contributions.
The numbers in your tax code tell your employer how much tax-free income you get in that tax year. HM Revenue and Customs (HMRC) works out your individual number based on your tax-free Personal Allowance and income you have not paid tax on (such as untaxed interest or part-time earnings). They also consider the value of any company benefits (such as a company car). The letters in your tax code tell your employer about your circumstances. For example, the letter “L” means that you are a basic rate taxpayer. Other letters can indicate that you are a higher-rate taxpayer, a Scottish taxpayer, or that you have certain deductions or allowances
Here is a table of the most common UK tax codes:
Tax Code Meaning
1257L Basic rate taxpayer with no other deductions or allowances
1257D Basic rate taxpayer with a deduction for a pension contribution
1257S Basic rate taxpayer in Scotland
400L Higher rate taxpayer with no other deductions or allowances
400D Higher rate taxpayer with a deduction for a pension contribution
400S Higher rate taxpayer in Scotland
0T No tax to pay
KXX Deduction for company car
W1 Emergency tax code
If you are unsure of your tax code, you can find it on your payslip, P60 form, or by contacting HMRC.
How to Find Your Tax Code
Your tax code is usually found on your payslip or P60 form. It is also displayed on your HMRC online account. If you cannot find your tax code, you can contact HMRC by phone or email.
What to Do If You Think Your Tax Code Is Incorrect
If you think your tax code is incorrect, you should contact HMRC as soon as possible. They will be able to investigate the matter and make sure that you are paying the correct amount of tax.
Tips for Ensuring You Are Paying the Correct Amount of Tax
There are a few things that you can do to ensure that you are paying the correct amount of tax:
Keep accurate records of your income and expenses.
Check your payslip or P60 form regularly to make sure that the tax code is correct.
If you have any changes in your circumstances, such as starting a new job or having a baby, make sure to inform HMRC so that they can update your tax code.
Types of UK Tax Codes
In addition to the most common types of tax codes listed above, there are a number of other types of tax codes that are used in specific circumstances. These include:
M code: This type of tax code is used for people who are married or in a civil partnership.
N code: This type of tax code is used for people who are not residents of the UK.
P-code: This type of tax code is used for people who are paying tax on their foreign income.
R code: This type of tax code is used for people who are receiving benefits, such as Universal Credit.
S code: This type of tax code is used for people who live in Scotland.
Conclusion
Your UK tax code is an important part of the tax system. It tells your employer how much Income Tax to deduct from your pay and how much National Insurance contributions you need to pay. If you are unsure of your tax code, you should contact HMRC to find out more.
Here are some additional things to keep in mind about UK tax codes:
Your tax code can change during the tax year if your circumstances change.
You may be able to claim a tax refund if you have overpaid tax.
You can use an online tax calculator to estimate how much tax you will owe.
You can find more information about UK tax codes on the HMRC website.
I hope this article has been helpful in explaining what your UK tax code means. If you have any further questions, please do not hesitate to contact HMRC.
