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Your tax code will normally start with a number and end with a letter. 1250L is the tax code currently used for most people who have one job or pension.
Your tax code is used by your employer or pension provider to calculate how much income tax should be withheld from your pay / income or pension.
The tax code normally starts with a number and ends with a letter.
For the tax year 2020/21, the standard code is 1250L and its used for most people who have just one job or pension. This, however, changes in some cases. A classic example is incomes of 100,000 and over, where you lose £1 tax-free allowance for every £2 income and if we are talking about the tax year 2020/21, for income of £125,000 and above, you have no tax-free allowance at all.
What do the codes mean
Letters in your tax code refer to your situation and how it affects your Personal Allowance.
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
T - Your tax code includes other calculations to work out your Personal Allowance
0T - Your Personal Allowance has been used up, or you’ve started a new job and your employer does not 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
S - Your income or pension is taxed using the rates in Scotland
S0T - Your Personal Allowance has been used up, or you’ve started a new job and your employer does not have the details they need to give you a tax code
SBR - All your income from this job or pension is taxed at the basic rate in Scotland (usually used if you’ve got more than one job or pension)
SD0 - All your income from this job or pension is taxed at the intermediate rate in Scotland (usually used if you’ve got more than one job or pension)
SD1 - All your income from this job or pension is taxed at the higher rate in Scotland (usually used if you’ve got more than one job or pension)
SD2 - All your income from this job or pension is taxed at the top rate in Scotland (usually used if you’ve got more than one job or pension)
C - Your income or pension is taxed using the rates in Wales
C0T - Your Personal Allowance has been used up, or you’ve started a new job and your employer does not have the details they need to give you a tax code
CBR - All your income from this job or pension is taxed at the basic rate in Wales (usually used if you’ve got more than one job or pension)
CD0 - All your income from this job or pension is taxed at the higher rate in Wales (usually used if you’ve got more than one job or pension)
CD1 - All your income from this job or pension is taxed at the additional rate in Wales (usually used if you’ve got more than one job or pension)
If your tax code has ‘W1’ or ‘M1’ or ‘X’ at the end, then it means you have emergency tax code.
If your tax code has a ‘K’ at the beginning
Tax codes with ‘K’ at the beginning mean you have income that is not being taxed another way and it’s worth more than your tax-free allowance.
For most people, this happens when you’re:
paying tax you owe from a previous year through your wages or pension
getting benefits you need to pay tax on - these can be state benefits or company benefits
Your employer or pension provider takes the tax due on the income that has not been taxed from your wages or pension - even if another organisation is paying the untaxed income to you.
SOURCE: GOV.UK
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ATTENTION!
This article intends to give only a general informative picture and should not, in any case, be taken as a rule. It is strongly recommended to seek a full and professional guidance specifically for your circumstances before making any decisions.
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