If you don’t understand what your tax code means, don’t worry, you’re not the only one. While it may seem easier to ignore your tax code and hope for the best, understanding what the numbers and letters mean will ensure you’re paying the correct amount of tax, and getting any tax relief you qualify for.
In this blog, we’ll discuss one of the most common tax codes, 1257L, and what it means.
Where can I find my tax code?
If you’re looking for your tax code, thankfully it’s easier to find than you may think. You can check your tax code on:
- Your payslip
- Any letters or emails you receive from HMRC
- The HMRC app
- Your personal tax account
- A tax code notice letter you receive from HMRC (they usually reach out to let you know if your code has changed and why)
How do I know if I’m on the right tax code?
Making sure your tax code is correct doesn’t just stop you from being overtaxed but ensures you’re receiving the right benefits. For instance, if you qualify to have your Personal Allowance increased to help with the upkeep of your work uniform, your tax code will likely change to 1263L.
We have a guide that’ll show you exactly what your tax code means. If you believe yours is incorrect, speak to you employer to let them know there’s been a mistake. You can also check what your tax code means on gov.uk.
What does the 1257L tax code mean?
1257L can be dissected into two parts. The ‘1257’ refers to the fact that you’re entitled to the standard £12,570 personal allowance (this is how much income you can earn tax-free). The ‘L’ means you’re entitled to the full personal allowance, and there are no other circumstances affecting the tax you pay.
You likely have this tax code if you have one job or pension, but it can change if, for instance, you’re entitled to any type of tax relief. It can also change if your earnings take you into the additional rate tax bracket (so your income is £125,140 upwards) meaning you’re no longer entitled to any tax-free Personal Allowance. In this instance the ‘L’ will change to ‘0T’.
It could also change if you take on another job, or become self-employed and want to pay your tax bill through your tax code.
Is 1257L an emergency tax code?
It’s only an emergency tax code if it’s followed by either, ‘W1’, ‘X’ or ‘M1’. You may be emergency taxed if your new employer hasn’t received your P45. It can also be because you’re now working for an employer after being self-employed, if you receive company benefits, or if you receive the State Pension.
If you have an emergency tax code, don’t panic – it’s usually updated once you or your employer give HMRC the correct details. If you’ve been overtaxed, HMRC will issue you with a refund!
Need help figuring out your tax? We can help! Talk to one of the team on 020 3355 4047, or get an instant quote today.
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