MANY workers are receiving new tax codes this month – but what does the 1275L code mean?
Your tax code is a mixture of numbers and letters and is used by your employer to work out how much tax you need to pay.
1
You’ll have one if you’re employed full-time or part-time, or receiving a private pension.
Following the new tax year, which started on April 6 2021 and runs until April 5 2022, HMRC is updating some tax codes.
It comes as the personal allowance has increased to £12,570 for basic-rate taxpayers and to £50,270 for higher rate taxpayers.
The personal allowance is the amount you can earn tax-free each year.
Basic rate tax payers pay 20% on earnings over the lower threshold, while higher rate payers are charged 40% above the top threshold.
If you’re on the wrong tax code, you could see any extra cash you have overpaid refunded to you.
What does the 1275L tax code mean?
The standard tax code for basic-rate tax payers is the most common one, and it’s changed from 1250L to 1275L this year.
The tax code is used for most people with one job and no untaxed income, unpaid tax or taxable benefits – for example, a company car.
Every tax code includes three or four digits in your tax code – you then multiply this number by 10 to see what you can earn tax-free a year.
What do the letters mean in my tax code?
THE letters in your the code on your payslip indicates how much tax you have to pay. Here’s our guide to what each of the letters mean:
- 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
- S Your income or pension is taxed using the rates in Scotland
- T Your tax code includes other calculations to work out your Personal Allowance, for example it’s been reduced because your estimated annual income is more than £100,000
- 0T Your Personal Allowance has been used up, or you’ve started a new job and your employer doesn’t 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
- Tax codes starting with K mean you have income that isn’t being taxed another way and it’s worth more than your tax-free allowance.
In other words, multiply 1275 by 10 and you’ll get your personal allowance of £12,570.
The letters in your tax code indicate how much you have to pay, and the L means that you are entitled to the basic personal allowance.
You might have a different letter in your tax code – we’ve rounded up what the other letters mean above.
You won’t have to pay income tax if your annual wages are lower than your personal allowance, which is indicated by the letters NT in your tax code.
You may also see NT if you’re a self-employed contractor who is required to pay national insurance but not income tax.
How do I find out my tax code?
There are a number of ways you can check what your tax code is for the current tax year.
Your tax code will be displayed on your payslip, usually listed near your National Insurance number.
Your company has to provide you with a payslip, so if you’re not sure how to access it, ask your employer for guidance.
You can also use the government’s online tax checker tool to view your tax code.
If it’s wrong, contact HMRC to let it know on 0300 200 3300. If it’s right, you don’t need to do anything.
SUN SAVERS
Have your cake jar and eat it with our top tips on the new sweet trend
AUCTION STATIONS
House in Wales on sale for just £12,000 – but wait until you see inside
GAS-LIGHTED
Hundreds of British Gas engineers left furious after losing their jobs
RETAIL WOES
Asda to axe 1,200 jobs at its bakeries under major restructuring plans
NO CREDIT
Half a million on Universal Credit have had benefits cut by surprise tax bill
NOT FINE
Martin Lewis warns drivers should check photo licences NOW or risk £1,000 fine
We explain how to earn up to £43,590 without paying tax.
We also reveal how the income tax threshold freeze will affect your wages and take home pay.
Meanwhile, thousands of parents will lose some or all of their child benefit payments under a stealth tax.
Half a million on Universal Credit have had benefits cut by surprise tax bill
