Understand Your Tax Code
The amount of tax you have to pay is depends on how much income do you have and how much tax have you paid in the last year. Each individual has their different tax code and it’s depending on their circumstances. Your tax code is made up of some numbers and a letter. The tax code is assigned by HMRC to collect the right tax. Make it sure this should be correct tax code and should be updated each ta year. Your tax code is worked out by the HMRC to tell how much tax you need to pay out of your salary or pension.
The most common tax codes
You tax code will be shown on your P45 (form given to you by your employer), your P60, your pay slip, alongside your pay or pension information. If you have only one job then your tax code is 1150L. The other major tax codes are 1060L, 1100L and working on more than one job, your tax code will be BR (it means you have to pay 20% for everything you earn from this job). Here are some examples of tax codes:
• 1100L
• 1100P, 1100V, 1100Y
• BR, OT, DO, NT
• K384
• 384T
What if you have the wrong tax code?
If you are one of them who over or under paid tax last year, you could be the victim of a blunder by the taxman. If you think by mistaken your tax code was wrong, seek advice from your accountant or you can contact to HMRC directly on phone number 0300 200 3300 with an updated tax code as required who will issue your employer with a revised tax code. If you have overpaid your tax, HMRC will inform you of a refund by post. Generally, you will be paid back through a tax code adjustment. At the meantime for underpaid tax you have to pay it back. This could be done by putting you on an emergency tax code.
The tax code should be change for a number of reasons where an individual issued with wrong tax code; For example, an individual has allowable expenses against their employment benefit, underpaid tax, taxable benefits, started a second job, and changed your jobs, state benefits have changed and many more. It is important for you to know how to check and challenge your tax code. Use DNS Accountants guide to find out what yours means, how to check your tax code and what to do if your tax code is wrong.
You can find out more about tax codes and also like:
• Understanding your tax code 1060L
• Understanding your tax code 1100L