Talk Nerdy To Me: Tax Codes (What Do The Letters Mean)
Okay so nearly everyone is entitled to a tax-free personal allowance, which means that you can earn a certain amount each year without being taxed.
This tax year 2018/2019 (if employed) your tax code is likely to be 1150L, it means your allowance is £11,500.
Not sure if yours in correct try out a Tax Calculator.
This is for the tax year 6 April 2018 to 5 April 2019.
|Band||Taxable Income||Tax Rate|
|Personal Allowance||Up to £11,850||0%|
|Basic Rate||£11,851 to £46,350||20%|
|Higher rate||£46,351 to £150,000||40%|
|Additional rate||over £150,000||45%|
What do the letters mean?
Okay K, L, S what does these letters at the end of our codes mean? The letters in our tax code refer to our situation and how it affects our Personal Allowance.
W1 or M1 – at the end which stands for W1 (week 1) and M1 (month 1) means you are being emergency taxed and your tax is being calculate on what you are paid in the current pay period, not the whole year. If you’re on this and shouldn’t be then speak to HMRC and get the money refunded.
S – your income or pension is taxed using the rates in Scotland
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.
L- most common tax code. This means that you are under 65 and eligible for the standard tax-free Personal Allowance – so this is the amount you can earn before income tax kicks in 1150L – you can earn £11,500 tax free!