Tax Code Changes
From 5 April 2020, the tax codes of employees across the UK will change. The tax code determines how much of an individual’s personal allowance is applied to their wages. This will then be used to calculate how much tax to deduct from those wages, with the intention that the correct amount of tax is taken throughout the year.
If you only have a single job and that is your sole source of income, then your tax code from 5 April 2020 should be 1250L. This is the standard tax code and it means that all of your £12,500 personal allowance will be used against that job.
PICTURE: Nick Pampoukidis/unsplash
If you have more than one job, you should get a different tax code for each. In many cases this will simply show how much of your personal allowance applies to each job (e.g. a code of 650L would mean £6,500 of your personal allowance was used for that job). Alternatively the code for a specific job may be BR or D0. BR means that HMRC think all your personal allowance is used elsewhere, so basic rate tax at 20% will be taken on all your wages. D0 means that HMRC think that both your personal allowance and basic rate band are used elsewhere, so higher rate tax at 40% will be taken.
Finally you may get a tax code that has been adjusted for other reasons. Common reasons for tax codes to be adjusted are unpaid tax from earlier years or non-cash benefits such as company cars. HMRC should send you a detailed breakdown of how they have calculated your code in this case.
If you have a personal tax account with HMRC, you can check and ask for adjustments to your tax codes online. (gov.uk/check-income-tax-current-year)
If you do not have a personal tax account you can contact HMRC through their general enquiry line – 0300 200 3300.
Where you have more than one job you can ask for HMRC to change the split of your personal allowance between jobs as well as asking them to correct any errors.
We hope you have enjoyed reading this article. The future of our volunteer led, non-profit publication would be far more secure with the aid of a small donation. You can also support local journalism by becoming a friend of HIP. It only takes a minute and we would be very grateful.