Taxation can be complex and confusing. Comprehending tax codes and their implications on your finances is undoubtedly a pain, but is crucial to your financial well-being.
For individuals working single jobs, Tax code 1257L has been the most common code during tax year 2023/24. This tax code signifies the tax-free personal allowance of £12570, which is allowed before you pay income tax.
What is Tax Code 1257L?
The 1257L tax code is the basic tax code for paying taxes through the PAYE system. It is assigned to taxpayers with It is assigned to taxpayers with one job and no untaxed income.
Almost every individual in the UK is eligible for a tax-free personal allowance. This implies that a certain amount of your income each year is not taxed. If your tax code is 1257L, your personal allowance is £12,570 for the 2023/24 tax year.
If you are employed part-time or full-time or receive a private pension, you should have received a letter from HMRC with an updated tax code.
Generally, around February/March, HMRC sends a letter that discloses your tax code for the new tax year (6 April 2023).
The 1257L tax code you receive from your employer can be explained as below:
- The number 1257 implies you can earn £12,570 before you pay income tax.
- The letter L indicates you are eligible for a standard personal allowance.
Tax code 1257L is the most common tax code for the tax year 2023/24. With the personal allowance frozen in the Spring Budget 2023, the tax code is likely to remain unchanged until 2028. In Wales and Scotland, the tax codes are C1270L and S1270L, respectively. Your tax code is crucial as it is used to determine how much tax you must pay.
The below details show various tax rates and equivalent income bands for the financial year 2023/24.
- Personal allowance (0%) - £12,570
- Basic rate (20%) – Up to £37,700
- Higher rate (40%) – GBP 50,271 to £150,000
- Additional rate (45%) – over £150, 000
HMRC converted the personal allowance of £12,570 and turned it into tax code 1257L. Therefore, if you have a 1257L tax code, it implies that you can earn £12,570 before you pay tax.
How to Check Your Tax Code?
Now that you know the tax code 1257L meaning, let’s understand how to find your tax code for the current year, which begins 6 April 2023 and ends on 5 April 2024. There are numerous ways to do this. Your tax code is shown on your payslip, typically listed next to your NIN (National Insurance Number).
Your company must provide you with a payslip. Therefore, if you need help accessing it, you can seek the guidance of your employer. Another way is to use the government’s online tax checker tool to check and verify your tax code.
I have a 1257L Tax code. Is My Tax Code Wrong?
The 1257L tax code will be generally correct for most employees. Usually, those with one job and no tax-deductible allowances or benefits will have a correct tax code. So, do a quick check with a tax code 1257L calculator to see if the code is right.
Nevertheless, the tax coding system can go wrong. Typical instances comprise:
- Change in employment status, having more than one job, leaving, retiring, or starting a new job.
- Having more than 1 income source, such as a pension and a job.
- Adjustments to tax-deductible allowances, for example, paying professional subscriptions.
- Changes to taxable benefits, for example, an employer providing a company vehicle for private use.
How Do I Correct My Tax Code?
The moment you realise there is a mistake with your tax code, you must contact HMRC by phone (0300 200 3300) or email. You must provide all the required, accurate information so that HMRC can work out your correct tax code.
Collect the below details before contacting HMRC:
- Full name (including middle names)
- Birth date
- Email address
- Employer/pension provider tax reference number
- Employee pension number/works number (private and/or company)
- Estimate of total income for the current tax year
- National Insurance Number
- Company benefits (for example, car fuel allowance, health care, etc.)
- Any other income (for example, property rental, savings interest, etc.)
- Weekly state pension payments or state benefits
Why Is It Necessary To Correct Your Tax Code?
It is necessary to get the tax code corrected because:
- If your tax code is wrong, you will end up paying the wrong tax amount.
- If you have paid excess tax, you can reclaim the overpayment, provided it is within HMRC’s deadlines.
- If you have underpaid your tax, you need to pay the difference amount to HMRC.
_cosmk.jpg)
How Can Unicorn Accountants Help You?
Keeping yourself updated about any changes in the tax code will avoid any likely financial discrepancies. If there are any errors, you must promptly inform HMRC to rectify the issues. This ensures all your tax-related matters are without any problems and in order.
Unicorn Accountants, a leading online accountant UK, can help you understand the 1275L tax code. We can help you check if there are any errors in the tax code and guide you in the process of informing HMRC and rectifying these errors. This way, you will not end up overpaying or underpaying taxes.