You are on the UK’s most often used tax codes for the tax year (2021-2022) if your payslip shows the tax code 1257L. At the beginning of every tax year, you get a new tax code from HM Revenue & Customs. A tax code is essential, as with the help of it; you will be able to work out how much tax you need to pay.
This blog will inform you about tax code 1257L and how much tax you will pay with it?
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What is Tax Code 1257L?
HM Revenue & Customs issues a tax code to a business to know the amount of income tax that needs to be deducted from your salary. It is a numeric number that is followed by a letter. You get a new tax code after one tax year.
Almost everyone in the United Kingdom is authorised to a tax-free personal allowance. It means that a specific amount of your profits is paid to you every year without any tax charged on it.
For 2021-2022, your personal allowance is £12,570 if your tax code is 1257L. This is because HM Revenue & Customs turned it in the personal allowance of £12,570 into this tax code. Therefore, it simply means that you can earn £12,570 before paying tax if you have this tax code.
How much Personal Allowance will I Get on this Tax Code?
If you are on 1257L, you will get a part of your personal allowance every time you get paid, as it is a cumulative code.
For instance, if you are paid monthly, you will receive an allowance of £12,570 ÷ 12 = £1,047.50 every month. In this way, at the end of every tax year, you will receive your total personal allowance.
Earnings above this are taxed at the following rate:
For Scotland, the tax rates are different from mentioned above.
When Does a Tax Coding System Go Wrong?
The following are examples of a tax coding system when it can go wrong.
- If a person has more than one source of revenue.
- If a person changes his job or has more than one job.
- If a person switches to tax-deductible allowances.
- If a person changes to taxable benefits, for instance, he is being given a company van for personal use.
And if you think that you should not be on a tax code 1257L, you can contact HMRC by post, phone, or webchat. Moreover, by logging into your personal tax account, you can also utilise the HMRC online form.
Quick Sum Up
We will conclude our blog by saying that check your payslip to know whether you are on a tax code 1257L. But, unfortunately, your tax code could go wrong on the conditions mentioned above. Therefore, contact HMRC directly by phone, email, or online if you see any mistake with your tax code.
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Disclaimer: This blog contains general information about a tax code.