Personal Tax / By Patterson Hall Chartered Accountants / 3 minutes of reading
Tax code 1257L will be the most common tax code for the tax year 2021/22 and 2022/23. It is expected to be unchanged until 2026.
It replaces tax code 1250L, which was the most popular tax code for the previous 2 tax years (2019/20 and 2020/21).
Most taxpayers will receive an updated tax coding notice from HMRC in February or March each year.
Your tax code is important as it is used to calculate how much tax you will pay.
What Is Tax Code 1257L?
The personal allowance is the amount a UK taxpayer can earn tax free. For the tax year 2022/23 the personal allowance increases to £12,570.
HMRC convert the personal allowance of £12,570 and turn it into tax code 1257L. They drop the last digit which gives 1257. The letter L is then added if you are entitled to the standard personal allowance. This therefore results in tax code 1257L.
Therefore if you have a tax code 1257L it means that you can earn £12,570 before you pay tax.
How Much Tax You Will Pay With Tax Code 1257L?
With a tax code 1257L your tax free total is £12,570 per annum. This is spread over the course of the year so that your weekly allowance would be £241. If paid monthly it would be £1,047.
Earnings in excess of this are taxed at 20%. This is for earnings between £12,571 and £50,270.
After this it increases to 40% for earnings between £50,271 and £150,000.
Earnings over £150,001 are then taxed at the highest rate which is 45%.
n.b Scotland has introduced its own tax rates which are slightly different to those stated above.
Is My Tax Code Wrong?
Tax code 1257L will be correct for the majority of employees. Typically those with just one employment with no benefits or tax deductible allowances will have a correct tax code. However the tax coding system can quickly go wrong. Typical examples include:
• A change of jobs, having more than 1 job, starting, leaving or retiring in the year
• Having more than 1 source of income such as a job and a pension
• Changes to tax deductible allowances e.g paying professional subscriptions
• Changes to taxable benefits e.g being provided with a company van for private use
How Do I Correct My Tax Code?
If you believe your tax code may be incorrect you should contact HMRC on 0300 200 3300. Contacting HMRC immediately will minimise the tax error so don’t delay.
Other ways to contact HMRC about an incorrect tax code can be found using the following link – Contact HMRC
Recommended Further Reading:
Tax Code BR – why you might be on a basic rate tax code and what does mean?
National Minimum Wage – are you earning above the required legal amount?
Married Couples Allowance – are you entitled to claim over £1.2k from HMRC?
DISCLAIMER – Please note that the content contained in this article is for general information only and is not a substitute for professional advice – read our full disclaimer
