Tax Code 1257L is a code for the tax year 2022/2023 in the UK. This tax code is related to the personal allowance of £12750. Every year, your tax code changes and you are notified about it by the HMRC. So, you must ensure your tax code is accurate and correct to make the correct tax payments.
This tax code is wrong because you are working with more than one firm and you’re retiring. Moreover, if you are enjoying certain taxable benefits, you must recheck your tax again. In this blog, we will discuss what tax code 1257L is and personal allowance and why it is important for filing accurate tax returns every year. Moreover, we will discuss how you can check if your tax code is correct or not. So, let’s discuss!
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What is Personal Allowance?
Personal Allowance is an exemption of income tax for the first threshold of £0 to £12 570 in the UK. So, if your salary is below or equal to £12 570, you are not liable to pay your tax. However, any salary beyond this income bracket will bring you to the income tax net.
So, it is essential to check if you can claim any income tax refund or income tax allowance from HMRC. For this, you must have the correct tax code 1257L on your tax statements. The following are the tax brackets:
- 0% tax rate on income £0 – £12 570 (Personal Allowance)
- 20% tax rate on income £12 570 – £50 270 (Basic rate taxpayer)
- 40% tax rate on income £50 271 – £150 000 (higher rate taxpayer)
- 45% tax rate on income above £150 000 (additional rate taxpayer)
What is Tax Code 1257L?
Tax Code 1257L represents a personal allowance on your income. If your income is below or equal to £12 570 for the tax year 2022/23, you are not liable to pay any tax on your income. Otherwise, you have to pay a tax according to the tax bracket.
This tax code of 1257L is most likely not to change until 2026. The tax code changes every year, but this new tax code will remain the same for the next five years. HMRC changes this tax code every year in February and March and notifies all the taxpayers.
The letter L represents the entitlement of tax-free personal allowance and 1257 signifies the amount of personal allowance.
How Much Tax Will Be Paid if I have a Tax Code 1257L?
As mentioned above, the income below the personal allowance is tax-free. However, if your income is above the personal allowance, you will pay a tax according to your tax status as a basic-rate, higher-rate or additional rate taxpayer.
This personal allowance of £12 570 is not given all at once. Instead, it is spread over several weeks and months. If it is given weekly, you will get a weekly allowance of £241. Otherwise, the monthly allowance will be equal to £1,047.
Why is My Tax Code Wrong?
Your tax code 1257L might get wrong if you have switched jobs or worked with more than one organisation. Moreover, if you have claimed pension, tax-deductible allowances or taxable benefits then your tax code will be most probably wrong.
Having multiple sources of income can lead you towards the wrong tax code. So, it is important to maintain a correct and accurate record with you. People having only one job or single source of income are not likely to get their tax code wrong as they have a simple and straightforward income source without any complications in terms of taxable benefits and tax deductible allowances or pensions.
How Can I Get My Tax Code 1257L Correct?
Getting your tax code is simple and you can simply contact HMRC and request them to correct your tax code. You can provide all the information about your income, tax-deductible allowances and taxable benefits for this purpose to the HMRC and your tax code will be corrected.
Moreover, you will give an estimation of the tax you owe to the HMRC and your current employment status to make your tax code correct.
On the other hand, you can seek assistance from a professional tax advisor to sort out your tax hassles and they will help you in correcting your tax code instantly. If you want to fix your tax code yourself, you can call HMRC at 300 200 3300 or visit their official website.
The Bottom Line
The bottom line is that tax code 1257L tells you about your personal allowance and income tax. Every year, HMRC alters this code and you get a notification about the updated tax code at the start of every year. However, if you have only one job, you don’t need to worry about this as your tax code will be correct.
However, if you have more than one job and claimed tax deductible allowances or taxable benefits, you must ensure your tax code is correct. If it is wrong, you can contact HMRC for correcting your tax code 1257L.
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Disclaimer: All the information provided in this article on tax code 1257L, including all the texts and graphics, is general in nature. It does not intend to disregard any of the professional advice.