What are PAYE tax codes?

What does tax code 1250l mean?

The general tax code in England and Northern Ireland for the 2020/21 tax year was 1250L. You usually receive a new tax code at the beginning of the year when changes to the personal Allowance are implemented.

UK Local Tax Accountants High Wycombe and Tax Accountants in Slough have opinions on Tax code describe in this article.  

A PAYE tax code consists of a number and a letter, such as 1257L. This code is used for people who have one job and a pension.

Every tax year starts on 6 April and closes on 5 April of the following year, with the PAYE tax code telling employer and pension providers how much tax-free income an employee is entitled to.

HMRC calculates an employee’s number based on an employee’s tax-free Personal Allowance and unpaid tax income.

HMRC also considers the value of benefits an employee receives from their job, such as a company car.

Tax code letters currently in effect

It lists the letters that make up each tax code and their meaning. Uk has regional differences that apply to businesses and employees.

L: An employee is entitled to the standard tax-free Personal Allowance when this code is present

M: An employee receives 10% of their partner’s Allowance as a Marriage Allowance

N: Employees have transferred 10% of their Allowance to their partner.

T: An employee’s tax code includes other calculations to calculate their Allowance

0T: Employees have used up their Allowance, have joined a new job, and the employer does not carry the information they need to provide a tax code to the employee.

BR: If an employee has more than one job or pension, their income is taxed at the basic rate.

D0: If an employee has more than one job or pension, their income is taxed at a higher rate.

D1: When employees have more than one job or pension, their income is taxed at an additional rate.

NT: When an employee does not pay any tax on this income

S: Employees’ income or pensions are taxed using Scottish rates when this code is used

S0T: An employee’s Personal Allowance has been exhausted, or they have started a new job, and their employer lacks the necessary information to provide them with a tax code

SBR: The basic tax rate is charged to an employee with income from more than one job or pension.

SD0 tax code: If an employee has several jobs or pensions, their income is taxed at the intermediate rate.

SD1: When an employee’s income from an employment or pension is taxed at a higher rate (usually when they have various jobs or pensions)

SD2: Scots tax employees’ income from employment and pensions at the top rate (usually when they have more than one job or pension)

C: An employee’s income or pension is taxed at rates

C0T: When an employee’s Allowance has been used up or when they start a new job, and their employer does not have the tax code information they need

CBR: An employee’s income from employment or pension is taxed at the simple rate by accountants in Slough (usually when they have various jobs or pensions)

CD0: When an employee has more than one job or pension, their income is taxed at the higher rate by Accountants High Wycombe

CD1: Whenever an employee earns more than one job or pension, they will be taxed at an additional rate.