What is a Tax Code?

When using our take-home pay calculator, you need to enter your tax code inside the tax code bar. However, if you need to become more familiar with your tax code, you are in luck as I explain everything here. From your basic income to your take-home pay, you will get everything in this guide.

Let’s start the guide and see what you need to know and what are the types of tax codes for each type of individual in the UK in 2024.

What is a Tax Code in the UK in 2024?

Your tax code is the key to determining what type and how much tax you owe to pay to the government. It is a code that employers and pension issuers use to identify the amount of tax that someone has to pay from their salary or income.

In 2024, there are different types of tax codes and each has a different tax deduction ratio. But who chooses the tax deduction ratio? The HM Revenue and Customs (HMRC) is the government department that calculates and issues notices to all employers about tax deductions from salaries. The most used and standard tax code is 1257L in 2024.

How to Find My Tax Code?

Your tax code is available in different places. If you are not sure what your code is then you can use the following tips to get your code in seconds.

1. Payroll Slip: You can check your tax code on your pay slip. If you are an employee and working for a company then your code will be mentioned on your payroll slip. Check your payroll and get your tax code from there.
2. P60: Check your annual tax review by your employer and get this income tax code from there.
3. P45: Another way to find your income tax code is by using your p45 form. This is the form that every employee gets when left the job.
4. Gov.Uk Website: If you are a registered member of gov.uk then you can sign in to your account and check your tax code there.
5. HMRC Smartphone App: Download the app of HMRC on your smartphone and login with your username and password or ID details. Go to the payroll section and check your tax code there.
6. Visit Your HR Department: You can also visit your HR department where you are working. The department will tell you about your code.

What Are the Types of Tax Codes in 2024?

The is very crucial to know about what are the types of tax codes in 2024 before you calculate your take-home pay. This code will let you know how much money you are going to pay an income tax from your gross salary.

The tax code is based on letters and numbers like 1257L. Here the numbers represent the tax-free earnings that you need to pay on your annual or monthly income.

The basic income tax code in the UK is 1257L which is for those who have earnings equal to or less than £12,570 per year. If you are earning £12,570 per year then you are free from paying any kind of tax in 2024.

Those who are disabled or receiving some special allowances like disability allowance and marriage allowance will get more relaxation. Their taxable income threshold should be higher.

Here are the types of tax codes and their tax calculations. These taxes for Northern Ireland and England PAYE tax rates for 2024:

PAYE Tax Rate	Tax Rate	Annual earnings that the rate applies to, once you’ve crossed the PAYE threshold.
Basic tax rate	20%	Up to £37,700
Higher tax rate	40%	From £37,701 to £125,140
Additional tax rate	45%	Above £125,140

Scotland PAYE Tax Rates for 2024

PAYE Tax Rate	Tax Rate	Annual earnings that the rate applies to, once you’ve crossed the PAYE threshold.
Starter tax rate	19%	Up to £2,162
Basic tax rate	20%	From £2,163 to £13,118
Intermediate tax rate	21%	From £13,119 to £31,092
Higher tax rate	42%	From £31,093 to £125,140
Top tax rate	47%	Above £125,140

Tax Code Meanings Explained

Every tax code has its own meaning that shows how much money an individual will get tax-free. Let’s explain tax code meanings in detail:

• L: Individuals can get a tax-free personal allowance.
• BR: This code is for those who have a pension program or a second job. In this case, you are not entitled to get the personal allowance as you already have consumed it through your main job. In this code, you have to pay the 20% basic-rate tax.
• D0: Applied when all your income is taxed at the additional rate, typically for very high earners. The tax rate is usually 40% or higher.
• D1: Used when all your income is taxed at a higher rate. It is calculated at a 45% additional rate.
• 0T: There is no tax-free personal allowance for you and you will be taxed as mentioned in the above tables.
• SD2: The same as BR but it is only used in Scotland and it is for a second job. The tax rate is 46%.
• K: Used when you have income that can’t be taxed using your allowances, often used for multiple jobs or certain taxable benefits. It is used when you have a negative personal allowance.
• M or N: This indicates that you’ve transferred some of your personal allowance to your spouse or civil partner.
• NT: Used when all your income is tax-free, for example, if you’re a non-UK resident or your income is below the tax-free threshold.
• T: This is a temporary code used when HMRC needs to review your tax situation.

F.A.Q

What does the 1257L tax code mean?

The tax code “1257L” means you have a tax-free allowance of £12,570 for the tax year, which is the standard tax-free allowance for most people in the UK.

How do I know my tax code?

You can find your tax code on your payslip, P45, or P60, or by logging into your personal tax account online.

What does the L mean on a tax code?

The “L” in a tax code indicates that you’re entitled to the basic tax-free Personal Allowance.

What is the tax code 1250L?

The tax code “1250L” signifies the standard tax-free allowance of £12,500 for the tax year, which is commonly used for individuals with one job and no other taxable income.