What The Different Tax Codes Mean
What is a tax code
Your tax code determines how much PAYE (Pay As Your Earn) tax you pay on your salary. Your personal tax code will be shown on your payslip.
The tax code system allows tax to be deducted directly from your salary or pension before you receive the money, by double checking any changes in your tax xode you can understand why HMRC have changed your code and make sure that it is correct so that you do not end up paying to much.
What your tax code means
The following is a list of the different UK tax codes, if you are in Scotland or Wales the tax codes will be different to the below.
L - You’re entitled to the standard tax-free personal allowance.
M - You receive ten per cent of your partner’s Personal Allowance.
N - You’ve transferred ten per cent of your Personal Allowance to your partner.
T - Here your tax code includes other calculations to work out your Personal Allowance.
0T - This means your Personal Allowance has been used, or you’ve started a new job and your employer doesn’t have all the details needed to give you a tax code.
BR - All your income from your job or pension is taxed at the basic rate.
D0 - All your income from your job or pension is taxed at the higher rate.
D1 - All your income from your job or pension is taxed at the additional rate.
NT - This code means that you’re not paying tax on this particular income.
If you have W1, M1 or X at the end of your tax code, it means you are on an emergency tax code. This usually happens when HMRC doesn’t have all your income details after you’ve changed jobs, are employed after being self-employed, or you’re receiving company benefits or a State Pension.
To query your tax code you will have to contact HMRC directly as your employer will not be able to deal with this for you.
