Britons paying tax are encouraged to check their payslips to ensure they are paying the right amount of tax. Tax is commonly loathed and millions will want to make sure they are not handing over more than necessary.
The key to understanding one’s liability can often be found in a personal tax code.
Tax codes are made up of a series numbers and letters.
These mean particular things about a person’s income and circumstances.
The numbers in a tax code outline how much tax-free income a person gets in a year.
This is calculated based on tax-free Personal Allowance as well as income a person has not paid tax on.
Other benefits a person may receive from their job are also considered, for example, a company car.
Letters, however, refer to a person’s situation and how it impacts their Personal Allowance.
For example, L shows a person is entitled to the standard tax-free Personal Allowance.
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The tax code 1257L is likely to be the most common amongst those working in the UK.
This code will apply to most people who have one job, no untaxed income, unpaid tax or taxable benefits.
Someone with this tax code can earn £12,570 before tax kicks in.
However, with the new tax year having started on April 6, Britons are being urged to check their payslips.
This is because tax code errors may have slipped through as a result of changes which can kick in at the start of a new tax year.
Tax codes Britons should look out for include ‘W1’, ‘M1’ or X at the end – as these are emergency tax codes.
These emergency tax codes mean people will pay tax on all their income above the basic Personal Allowance.
Individuals may be put onto an emergency tax code if HM Revenue and Customs (HMRC) does not get their income details in time after a change in circumstances.
This could include a new job, working for an employer after being self-employed, or receiving the state pension.
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The Government website states: “Emergency tax codes are temporary. HMRC will usually update your tax code when you or your employer give them your correct details.
“If your change in circumstances means you have not paid the right amount of tax, you’ll stay on the emergency tax code until you’ve paid the correct tax for the year.”
People are able to check their income tax for the current year by visiting the Government website.
Individuals can use the service to:
- Check tax code and Personal Allowance
- See estimated income from jobs and pensions and the tax people can expect to pay for the current tax year
- Update details of income from jobs and pensions – as people may pay too much or too little tax if not up to date
- See if a tax code has changed
- Tell HMRC about changes impacting a tax code
- Update their employer or pension provider details.
However, people should be aware they cannot check their income tax for the current year if self assessment is the only way they pay income tax.
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