Tax code 1257L explained as thousands of Britons could be due money back from HMRC | Personal Finance | Finance
Britons who pay tax are frequently told to check their tax code to ensure they are paying the right amount – especially as some might be paying too much, or not enoughIt could mean some are owed money from His Majesty’s Revenue and Customs (HMRC), or need to pay more.
The numbers in a tax code will show how much tax-free income a person can get in that particular tax year.
To arrive at how much income a person can earn before being taxed, all individuals will usually need to do is multiply the number in the tax code by 10.
For example, the tax code 1257L is perhaps the most common amongst the working population of the UK.
It will apply to most people who have one job, no untaxed income, unpaid tax or taxable benefits.
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These mean a person will pay tax on all their income above the basic Personal Allowance.
Some people may be put onto an emergency tax code if HMRC does not receive income details in time after a change in circumstances.
This can include:
- Getting the state pension
- Getting company benefits
- A new job
- Working for an employer after being self-employed.
While emergency tax codes are temporary they could result in Britons paying more tax than necessary, or underpaying.
According to the consumer group Which?, a basic-rate taxpayer given an emergency tax code that excludes their Personal Allowance could pay an extra £2,514 in tax in the 2022-23 tax yea
Once a person or their employer provides HMRC with the correct details, they should be moved off the emergency tax code.
If an individual’s change in circumstances means they have not paid the right amount of tax, they will stay on the emergency tax code until they have paid the correct tax for the year.
To get off an emergency tax code, people will need to provide as much information as possible.
If they have started a new job, for example, they should provide their employer with their P45 from their previous role.
People can find and check their tax code in various ways, including:
- On a ’Tax Code Notice’ letter from HMRC if they have one
- On their payslip
- On the HMRC app
- By checking online – sign in or creating a personal tax account needed.