1257L Tax Code

The 1257L tax code is a commonly used tax code in the United Kingdom for the 2024/25 tax year. It indicates the amount of income an individual can earn before they start paying income tax. Here is a breakdown of what it represents:

  1. Personal Allowance: The tax code 1257L includes a personal allowance of £12,570. This means that you can earn up to £12,570 in the tax year without paying any income tax.
  2. Calculation: The number in the tax code (1257) is derived from the personal allowance (£12,570). To get the tax-free amount, you multiply the number by 10 (1257 x 10 = 12,570).
  3. Suffix ‘L’: The suffix ‘L’ indicates that the individual is entitled to the standard personal allowance.
1257L tax code

How It Works

  • Earnings Below £12,570: If you earn below this threshold, you will not pay any income tax.
  • Earnings Above £12,570: If you earn more than this amount, you will pay income tax on the amount over the personal allowance at the applicable rates.

Example

If your annual salary is £20,000 and your tax code is 1257L:

  • The first £12,570 of your salary is tax-free.
  • You will pay income tax on the remaining £7,430 (£20,000 – £12,570).

Is 1257L an emergency tax code?

No, the 1257L tax code is not an emergency tax code. It is the standard tax code for most individuals in the United Kingdom for the 2023/24 tax year, reflecting the standard personal allowance of £12,570.

Emergency Tax Codes

Emergency tax codes are used by HM Revenue and Customs (HMRC) when they do not have enough information about an individual’s income or tax situation. These codes are temporary and are applied in situations such as:

  • Starting a new job without a P45 form from a previous employer.
  • Receiving company benefits or the state pension for the first time.
  • Having a change in your circumstances that affects your tax situation and HMRC has not been informed.

Common emergency tax codes include:

  • 1257L W1 (Week 1): Tax is calculated on a weekly basis without accounting for cumulative earnings.
  • 1257L M1 (Month 1): Tax is calculated on a monthly basis without accounting for cumulative earnings.
  • 1257L X: Tax is calculated in the same way as W1 or M1, but is used in other scenarios.

Emergency tax codes often result in paying too much tax initially, but this can be corrected once HMRC has the correct information.

What to Do If You Have an Emergency Tax Code

If you find yourself on an emergency tax code, you should:

  1. Provide Information: Give your new employer your P45 form from your previous job, or complete a new starter checklist (previously known as a P46).
  2. Contact HMRC: Ensure HMRC has your up-to-date details, including any changes in your employment or personal circumstances.
  3. Check Your Payslip: Regularly review your payslips and tax code notices to ensure your tax code is correct.

Once HMRC has all the necessary information, your tax code will be updated, and any overpaid tax will be refunded through your salary.

Understanding your tax code is important as it ensures that you pay the correct amount of tax throughout the year. If you have any doubts about your tax code or think it might be incorrect, it is advisable to contact HM Revenue and Customs (HMRC) for clarification.