Over a period of time, tax codes may change with a change in income and circumstances for individuals. The main aim of this blog post is to discuss the reason why someone may be assigned a 1269L tax code. Additionally, we will also review other key tax codes applied in the UK and analyse how tax codes are calculated.

Why Is My Tax Code 1269L?

You may have been assigned the 1269L tax code to allow for a higher amount of Personal Allowance. While the usual amount of tax-free Personal Allowance is £12,750 for taxpayers in the UK, if your tax code is 1269L, your Personal Allowance will be at a higher amount of £12,690. The addition of the letter L indicates that a basic rate of tax has been applied to your income.

Tax codes are a combination of letters and numbers that determine the amount of income tax due on an individual. While the letters indicate your financial position and how it relates to your personal allowance, the numbers tell your employer or pension provider the amount of tax-free income that you are eligible for in that tax year. 

For instance, 1257L (the most common 2021-22 tax code in the UK) refers to the new Personal Allowance rate for 2021-22, which is £12,570 and the letter “L” indicates that the individual is entitled to this amount of tax-free income. Any taxes that are to be charged will be above additional amounts beyond this figure.

You can check your income tax calculations online through the HM Revenue and Customs website. If you are employed in more than one job, you will have to conduct multiple calculations to have an estimate for income tax deductions for each source of earnings.

Why Is My Tax Code 1282L?

The 1282L tax code indicates that you have been granted a tax relief by HMRC due to the work from home nature of your employment since the onset of the pandemic. 

The reason for this tax relief is to help individuals adjust for the increased expenses that they would have incurred as a result of increased heating, internet usage and electricity bills while working from home. However, this relief applies only to individuals who have been asked by their employers to work from home and have not personally chosen to do so.

Claimants are able to receive up to a £125 reduction in their tax bill when they are assigned a 1282L tax code. This estimate is based on the following calculations:

  • Tax relief of 20% on £6 = £1.20 a week = £62 per year for basic-rate taxpayers 
  • Tax relief of 40% on £6 = £2.40 a week = £125 per year for higher-rate taxpayers

What Does Tax Code 1250LX Mean?

The 1250LX tax code on your payslip means that the HMRC is directing your employer to consider your tax deduction as a non-cumulative one. This means that the tax rate applied to your income is only applicable for the period in consideration and the same rate may not be applied for the entire tax year.

The reason for being assigned this unique tax code may be due to the reason that the individual is changing jobs and has been assigned a new tax code in the middle of the tax term. It may also be applicable in cases where self-employed individuals return to salaried jobs and experience a change to their tax code. Or it may be due to the fact that someone is returning to the workplace after a career sabbatical.

The 1250LX tax code is an emergency tax code. This means that it is temporary and can be changed with a change in an individual’s circumstances. Other emergency tax codes include those ending with an M or a W.

What Is The Meaning Of A BR Noncum Tax Code?

A BR Noncum tax code indicates that the entire amount of your income must be taxed at the basic rate of 20 per cent without taking into consideration your tax-free Personal Allowance of £12,750. 

It is usually applied when the HMRC and your employer do not have complete details regarding your employment and/or income details and the BR tax code is assigned to you while the documentation is complete and a permanent tax code can be assigned to you.

In addition to this, you can be assigned a BR tax code if:

  • an individual has not provided their employer with a complete P45 form or a P46
  • someone is being transferred from being self-employed to a PAYE employee
  • you are receiving an additional income through a second job or a pension

A non-cumulative tax code is one that only takes into account the period in question for your tax calculation and deduction. This means that depending on whether you receive your pay on a weekly or monthly basis, a non-cumulative tax code will apply for that specific period only and it may change the next time you receive a payslip. 

What Is The D0 Tax Code?

The D0 tax code indicates that the individual will be liable to pay income tax at a higher rate of 40 per cent for all their incomes. It is commonly used in cases where individuals have more than one job or pension. The HMRC issues this tax code to individuals if all of their tax-free allowances have been used against another source of income. 

Individuals are assigned a D0 tax code because (a) they have multiple sources of income and (b) calculations predict that their second source of income will cause their total combined gross earnings to be between £37,701 and £150,000. This is only after any tax-free allowance has been deducted.

Why Is My Tax Code 0T1?

If your tax code is 0T1, it means that you have no tax free personal allowance and a basic rate of income tax will be applied to the total amount of your income.

There are many reasons why an 0T1 tax code with M or W extensions is assigned to individuals. One of the reasons may be that you have no tax free allowance remaining which may be exempted from income tax. Another reason could be that you’ve recently started a new job. Due to this, you have not been able to give your employer your old P45 and you haven’t submitted your P46 as yet. 

How Are Tax Codes Calculated?

The following steps are followed by the authorities while assigning tax codes:

  • Step 1: Your tax allowances are calculated. In most cases, this is an individual’s personal allowance added to any other allowances and job expenses.
  • Step 2: Your deductions are calculated. These are incomes for which tax has not been paid and may include any part-time work or certain state benefits.
  • Step 3: The deductions are subtracted from the tax allowances. The result is your pre-tax income. If this amount equals personal allowance, your income remains tax-free.

If you don’t know your tax code, you can find it through any of the below-listed documents:

  • Payslip
  • P45 form
  • P60
  • PAYE coding notice
  • Pension advice slip
  • HMRC website

What Is Personal Allowance?

When you are working in the UK, there is a certain amount of your income that remains tax-free as it is considered to be a Personal Allowance. The amount set for Personal Allowance during the 2021-2022 tax period is £12,750. 

Your personal allowance is applicable to your combined incomes from different sources. However, for the purpose of tax deduction, your main or primary job, which is also the source of a higher income is considered for Personal Allowance deduction prior to a tax rate is applied.

Since you get Personal Allowance once (it does not apply to each individual source of income), it may be in your own interest to have it applied to your main job and not the second one. However, if someone works two jobs and their cumulative income is less than the Personal Allowance amount of £12,750, they can have it spilt across both incomes. Sometimes a second job may increase your tax bracket which leads to a higher tax deduction on your income with an insignificant impact on your take-home salary.

How Much Income Tax Do I Have To Pay?

Incomes above the minimum cap are taxed at an incremental rate of 20 per cent to 45 per cent depending on whether an individual belongs to the basic, higher or additional tax rate band. Below are details of these bands:

  • 0 per cent income tax when income is up to £12,570
  • 20 per cent income tax when income is between £12,571 and £50,270 
  • 40 per cent income tax when income is between £50,271 and £150,000 
  • 45 per cent income tax when income is above £150,001

If you are self-employed, you are required to file a self-employed tax return to pay your taxes through a self-assessment. 

Conclusion:

The discussion n the article makes it clear that a 1269L tax code indicates that the amount of Personal Allowance due to the individual has been increased by HMRC from £12,750 to £12,690. Your personal allowance is applicable to your combined incomes from different sources. However, for the purpose of tax deduction, your main or primary job, which is also the source of a higher income is considered for Personal Allowance deduction prior to a tax rate is applied.

FAQs: Why Is My Tax Code 1269L?

Why has my tax code changed for no reason?

Tax codes change when there is a change in someone’s income or personal allowance. For instance, 1257L (currently the most common 2021-22 tax code in the UK) refers to the new Personal Allowance rate for 2021-22, which is £12,570

What does the T mean on my tax code?

Having a T on your tax code indicates that there are some other calculations built into your tax code. This may be due to the fact that someone has used up all their Personal Allowance or they have changed jobs and their new employer does not have complete information about them.

What does it mean if your tax code is higher?

A higher tax code means that you can earn more money before your income is taken into account for a tax deduction. This means that with a higher tax code, you will end up paying less tax during a tax year.

How do I tell HMRC my tax code is wrong?

You can call HMRC on 0300 200 3300 to inform them if your tax code is wrong.

How do I check if my tax code is correct?

To check if your tax code is correct, you can review your Payslip, P45 form, P60, PAYE coding notice, Pension advice slip or the HMRC website.

References:

Does the tax code 1269L mean you’ll get taxed higher than if you’re 1257L?

Working from home? Customers may be eligible to claim tax relief from 2021 to 2022 – GOV.UK

Estimate your Income Tax for the current year – GOV.UK

Income tax calculator 2022-23, 2021-22 and 2020-21

Understanding your tax code for 2019/20 – Liquid Friday.

1250lx — MoneySavingExpert Forum

Understanding your employees’ tax codes: What the numbers mean – GOV.UK

HMRC Tax Codes Explained

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