January has almost come to an end, and with that, many of us will have received our long-awaited first payslip of the year.
For those who got paid a week early before Christmas, it'll come as a huge relief to have the money land in our accounts. And on each of our payslips, there's a number of codes that all mean something different in terms of tax.
Being aware of what these codes means will ensure you're kept in the know about your tax payments, so we've rounded up the meaning of them all and where you'll find them on your wage slip.
Liverpool Echo reports that the most commonly seen code is 1257L. This is used for most people with one job and no untaxed income, unpaid tax or taxable benefits (for example a company car).
Gov.uk explains: "You usually multiply the number in the tax code by 10 to get the total amount of income they can earn before being taxed." This means an employee with the most common tax code of 1257L can £12,570 before being taxed.
But if there are certain other letters in this code, it means your tax code is different.
For example, if W1 and M1 appear at the end of the code then this means you are on an emergency tax code.
If you can see these letters, it indicates that you're being taxed only for your current pay period rather than the year as a whole. W1 stands for week one and M1 stands for month 1. An example of a code with this in is "577L W1".
The letter K also changes the meaning of your tax code.
The government website explains: "The letter K is used in an employee’s tax code when deductions due for company benefits, state pension or tax owed from previous years are greater than their Personal Allowance.
"Multiply the number in their tax code by 10 to show how much should be added to their taxable income before deductions are calculated."
This means an employee with a tax code of K475 and a salary of £27,000 would have a taxable income of £31,750.
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