If you are employed, your income is subject to PAYE (pay as you earn) and the tax code is used to determine how much tax is deducted in each pay period.
This is a combination of numbers and letters. Someone with very simple affairs may well have a tax code of 1257L, equal to the personal allowance of £12,570.
However, if there is other income such as a state pension or private pension, then the code is likely to be reduced. Other reasons for a lower tax code include being in receipt of benefits from the employment e.g., medical benefits or a company car, savings interest etc. The code can also be greater than this e.g., if receiving marriage allowance, blind persons allowance, flat rate job expenses etc.
HMRC have recently launched a new tool to help check what your tax code means, and it can be accessed here.
https://www.gov.uk/guidance/check-what-your-tax-code-means
However, please note this is based on limited information and does not take into account all circumstances.
If you would like us to look at your tax coding, please contact us.
