The new tax year began on April 6 and will run until April 5, 2026 and in the lead-up, HMRC sent out emails to taxpayers to remind them to prepare for the change
Brits are urged to make a vital check to ensure they are paying the correct amount of tax as the new tax year starts. The new tax year began on April 6 and will run until April 5, 2026. In the lead-up, HMRC sent out emails to taxpayers to remind them to prepare for the change.
The main preparation Brits needed to make was to check their tax code. Tax codes are made up of a series of numbers and letters and are assigned to you by HMRC based on the information it has on your income.
This information is provided to HMRC by your employer or pension provider. The code dictates how much of your income is taken in tax, and everyone who is paid through PAYE has one.
If your code is incorrect, you risk either paying too much tax – or not enough. If you are not paying the right amount you will either receive a tax rebate from HMRC or be slapped with an extra tax bill. The amount will depend on how long your tax code has been wrong.
It’s a common misconception that employers are in charge of making sure your tax code is correct. However, it is not, and it is down to the worker to make sure everything is right and up to date.
According to research from Canada Life, nearly one in five UK adults have never checked their tax code, and those who have done so have only done so on average once every 16 months. Brits most commonly check for no specific reason (19%) or out of habit (17%), but others have done so due to a job change (12%) or having been on the wrong tax code before (8%).
Among all the 2,000 UK adults polled by Opinium for the research, fewer than half know whether their tax code is currently correct. Almost four in 10 don’t know what any of their tax code means – leaving them at a disadvantage.
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John Chew, tax and estate planning specialist at Canada Life, said: “Understanding your tax code is vital to ensure you’re paying the right amount of income tax. Those who are not on the right code may find themselves out of pocket. If it’s wrong, you may end up contributing more or less than you’re supposed to. So, if you haven’t checked your tax code(s) recently, now is a good time.”
The most common tax code is currently 1257L, and this is used if you have one source of income – either through a job or pension. Those with this tax code can earn £12,570 a year, which is currently the standard personal allowance, before paying income tax.
Tax codes start with an “S” in Scotland and a “C” in Wales, and if you have a second job – or multiple forms of income – your tax code will be different.
To make sure your tax code is correct, you should be aware of what the different tax codes are, the numbers represent how much you earn tax free, which is just the personal allowance and the letters relate to a taxpayer’s situation and how it alters the personal allowance. The letters include:
- L – You’re entitled to the standard tax-free personal allowance
- 0T – No personal allowance
- BR – All income from this source is taxed at the basic rate
- DO – All income from this source is taxed at the higher rate
- D1 – All income from this source is taxed at the additional rate
- K – Total deductions exceed their allowances
- M – Marriage Allowance receiving 10% of their spouse or civil partners’ personal allowance
- N – Marriage Allowance providing 10% of their unused personal allowance to their spouse or civil partner
- NT – No tax is due on this income
- C – Paying income tax in Wales
- S – Paying Scottish rate of Income Tax in Scotland
- T – Tax office needs to review the tax code or to keep personal details confidential
- W1 or M1 – Emergency tax codes for week one or month one depending on when a person gets paid
You can find your tax code on your payslip, a P45 if you have recently left a job or a P60 if it is the end of a tax year – you can also find your tax code online at Gov.uk. if you think your tax code is wrong, you need to contact HMRC directly.
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