The most common code for those with one job or a pension is understood to be ‘1257L’
Tax codes on your payslip might look like a random mix of letters and numbers, but they’re crucial in determining how much tax you owe on your wages. If they’re incorrect, you could be due a refund worth thousands of pounds.
While it’s easy to overlook this code when your wages hit your bank account, it’s essential to verify it’s accurate for your situation. HMRC works out each individual’s code based on their ‘tax-free Personal Allowance and income’ they haven’t paid tax on.
This includes untaxed interest and part-time savings, plus the worth of benefits like a company car. Currently, the most common code for those with one job or a pension is understood to be ‘1257L’.
In this, the ‘L’ shows that you’re entitled to the standard tax-free Personal Allowance – the amount you can earn each year before paying tax. This figure is currently £12,570, which explains the ‘1257L’ code.
According to a previous Mirror report, the Government has previously explained: “You’re entitled to the standard tax-free Personal Allowance of £12,570, but you also get medical insurance from your employer. As this is a company benefit it lowers your Personal Allowance and changes your tax code.
“The medical insurance benefit of £1,570 is taken away from your personal allowance, leaving you with a tax-free Personal Allowance of £11,000. This would mean your tax code is 1100L.”
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Full list of HMRC tax codes:
- L: You’re entitled to the standard tax-free Personal Allowance
- M: Marriage Allowance: you’ve received a transfer of 10% of your partner’s Personal Allowance
- N: Marriage Allowance: you’ve transferred 10% of your Personal Allowance to your partner
- T: Your tax code includes other calculations to work out your Personal Allowance
- 0T: Your Personal Allowance has been used up, or you’ve started a new job and your employer does not have the details they need to give you a tax code
- BR: All your income from this job or pension is taxed at the basic rate (usually used if you’ve got more than one job or pension)
- D0: All your income from this job or pension is taxed at the higher rate (usually used if you’ve got more than one job or pension)
- D1: All your income from this job or pension is taxed at the additional rate (usually used if you’ve got more than one job or pension)
- NT: You’re not paying any tax on this income
- C: Your income or pension is taxed using the rates in Wales
- C0T: Your Personal Allowance (Wales) has been used up, or you’ve started a new job and your employer does not have the details they need to give you a tax code
- CBR: All your income from this job or pension is taxed at the basic rate in Wales (usually used if you’ve got more than one job or pension)
- CD0: All your income from this job or pension is taxed at the higher rate in Wales (usually used if you’ve got more than one job or pension)
- CD1: All your income from this job or pension is taxed at the additional rate in Wales (usually used if you’ve got more than one job or pension)
- S: Your income or pension is taxed using the rates in Scotland
- S0T: Your Personal Allowance (Scotland) has been used up, or you’ve started a new job and your employer does not have the details they need to give you a tax code
- SBR: All your income from this job or pension is taxed at the basic rate in Scotland (usually used if you’ve got more than one job or pension)
- SD0: All your income from this job or pension is taxed at the intermediate rate in Scotland (usually used if you’ve got more than one job or pension)
- SD1: All your income from this job or pension is taxed at the higher rate in Scotland (usually used if you’ve got more than one job or pension)
- SD2: All your income from this job or pension is taxed at the advanced rate in Scotland (usually used if you’ve got more than one job or pension)
- SD3: All your income from this job or pension is taxed at the top rate in Scotland (usually used if you’ve got more than one job or pension)
Additionally, tax codes bearing ‘W1’, ‘M1’, or ‘X’ may appear on particular payslips. These usually indicate ’emergency circumstances’ that arise during major life transitions such as starting fresh employment, receiving workplace benefits, or beginning to draw a State Pension.
Noticing a ‘K’ at the start of your tax code also indicates an alternative tax setup, possibly because you’re settling previous year’s tax debts through your current wages or pension.
The Government’s advice continues: “Your employer or pension provider takes the tax due on the income that has not been taxed from your wages or pension – even if another organisation is paying the untaxed income to you.”
It then adds: “Employers and pension providers cannot take more than half your pre-tax wages or pension when using a K tax code.”
Should you think you’ve been incorrectly taxed on your income, the Government provides an online form which you can utilise to claim a refund.
Specialists at RIFT disclose that the average amount reclaimed in tax rebates across the UK totals £3,000, based on its examination using ‘average total claims data for a four-year period’.
You can check your tax code for the current year here and access the HMRC website here.
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