Category Archives: Tax Codes

Tax Code Letters M and N

If you have the tax code letter M or N after the number in your tax code notification then these two letters are linked as it means that you  have either transferred or have received a transfer of the 10% personal allowance to/from your partner.

The marriage transfer allowance was introduced so that those who did not pay tax on their earnings up to the full personal allowance, could transfer 10% of their allowance to their partner (as long as their partner was only paying basic rate tax).

So, for example if your tax code is 1265M that means that your partner has transferred 10% of their personal allowance to you (amounting to £1,150) and this is added on to your personal allowance of £11,500, giving you a total personal allowance of £12,650.

Conversely, if your tax code is 1035N then that is likely to be because you have volunteered to give up 10% of your personal allowance to transfer over to your partner who can make use of it. This is worked out by taking £1,150 away from £11,500, thus giving you a personal allowance of £10,350.

(The above figures are based on amounts for the 2017/18 tax year.)

If you believe that your tax code is wrong then you should contact HMRC on 0300 200 3300.

 

 

Tax Code Letters – L

Letter L

When you are given a tax code it will consist of some numbers followed by a letter.

The number will indicate how much personal allowance you can have in the relevant tax year and the letter gives you more information about how that number was arrived at.

In the case of the letter L, this is the most common letter used as it is given to those people who are entitled to the standard personal allowance.

If you are assigned the letter L at the end of your tax code then it is likely that you have pretty simple tax affairs.

In order to work out the amount of personal allowance that you are are entitled to you will need to multiply the number by 10 to get the actual figure.

So for example, if your tax code is 1150L then you multiply 1150 by 10 and you get a personal allowance of £11,500 (which is the standard personal allowance for the tax year 2017/18).

If you believe that your tax code is wrong then you can ring HMRC on 0300 200 3300.

 

 

2017/18 Tax Codes

It is generally the case that UK taxpayers will be issued with a new tax code each year. Tax codes are issued to individuals and their employers so that the employer knows how much tax they should deduct from the employee’s earnings.

Standard tax code

The standard 2017/18 tax code for those with simple financial situations (for example, having only one job, no tax owing from previous years, no other employee benefits etc) is 1150L.

This standard tax code means that you are entitled to the UK personal allowance of £11,500 for the year and therefore that is the amount that you can earn before any tax is deducted.

But it may be the case that you do not have this standard tax code or perhaps your code has another letter at the end (instead of L).

If this is the case then you may have one or any of the following which may affect your tax code (and these are just some examples):

  • earnings from another job
  • benefits in kind
  • tax owed from previous years
  • pension income
  • transfer of the marriage allowance
  • earnings over £100k
Can’t figure out your tax code?

If you can’t figure it out though, you will probably need to speak to the Inland Revenue to check that you have the right tax code and will not be paying too little (or indeed too much) tax in 2016/17. The number to call for tax code queries is 0300 200 3300.

Or you may find it easier to check your tax code online which you can here do if you have a Government gateway ID.

Tax code letters

So the letters at the end of the tax code may also give you an indication of what your code is all about.

There are a couple of new tax codes that have been introduced recently which take account of the new transferable marriage allowance – those are the letter M if you have received a transfer of the marriage allowance and the letter N if you have given a up part of your allowance.

You can check out a full list of the tax code letters and what they mean on the Inland Revenue website.

Tax Code 2016/17

So it is coming up to the time when the Inland Revenue will start to issue your tax code for 2016/17. Tax codes are issued to individuals and their employers so that the employer knows how much tax to deduct and at what rate.

Standard tax code

The standard 2016/17 tax code for those with uncomplicated financial situations (only one paid employment, no tax owing, no other allowances due etc) will be 1100L. This tax code means that you are entitled to the standard UK personal allowance of £11,000 of tax free earnings in the tax year 2016/17. (Originally the personal allowance was going to be £10,800 in 2016/17 but the increase to £11,000 was brought forward by a year).

But lots of people have different tax codes that are not at the standard rate with perhaps different letters at the end of the code. It can be very confusing to try and figure out why you may have a different tax code to the standard one and getting through to the Inland Revenue on the phone might be a struggle (0300 200 3300 is the number to all for tax code queries). You may owe tax from previous years, you may have more than one job or your partner may have passed you part of their allowance are just a few examples of why you may not have a standard tax code.

Can’t figure out your tax code?

If you can’t figure it out though, you will probably need to speak to the Inland Revenue to check that you have the right tax code and will not be paying too little (or indeed too much) tax in 2016/17. Although paying too little tax may sound good, it will have to be repaid at some point!

Tax code letters

So the letters at the end of the tax code may also give you an indication of what your code is all about.

There are a couple of new tax codes that have been introduced this year which take account of the new transferable marriage allowance – those are the letter M if you have received a transfer of the marriage allowance and the letter N if you have given a up part of your allowance.

You can get a full list of the tax code letters and what they mean on the Inland Revenue website.

Why Am I Not Getting the Full UK Tax Allowance?

If you are a UK taxpayer then for the tax year 2011-12 the personal allowance for the year is £7,475. However, most people who are under the PAYE scheme (pay as you earn, where your tax is deducted by your employer), will be sent a tax coding notice from HM Revenue to advise you of your own specific tax allowance. Continue reading Why Am I Not Getting the Full UK Tax Allowance?