At Green & Peter, accountants in London, we often get asked about tax codes. Many people struggle to understand what the combination of numbers and a letter means for their finances. One question that comes up quite often is ‘What does tax code 1263L mean?’ So, this week, we’ve written a blog to explain this code and how it affects your income.
What is a tax code?
Your tax code is a series of numbers and a letter, e.g. 1257L which tells your employer how much tax to deduct from your salary. You’ll only have a tax code if you are employed. If you are self-employed and not paid via payroll, you probably won’t need a tax code from HMRC.
How is my tax code calculated?
The tax code tells you how much tax-free pay you receive. If you receive the standard personal allowance, your code will be 1257L, which means you get £12,570 of tax-free pay. Your tax-free pay might be adjusted by transfers of allowances or adjustments for other income such as a rental property or your code may be adjusted to give you tax relief on additional pension contributions where tax relief is not given at source (via payroll). For more information on the different letters in a tax code, see the government website.
How do I find my tax code?
Your tax code appears on your tax coding notices that HMRC send you and on your payslips from your employer. You can also locate your tax code using the HMRC app or by logging onto your personal HMRC tax account via the government gateway. You’ll need your government gateway ID and password for this.
What tax code should I be on?
As your tax code is individual to your personal circumstances, this question can only be answered by looking carefully at your tax information. Many people who receive the full standard personal allowance will be on tax code 1257L but if your tax code is different, you could try asking your payroll department, call the HMRC helpline on 0300 200 3300 or check online. It’s best to phone as soon as they open in the morning at 8am to avoid long queues (and don’t leave it until January to contact them).
My tax code is 1263L – why is this?
If you have tax code 1263L, HMRC has given you a personal allowance of £12,630 per year. This is £60 more than the standard personal allowance of £12,570. Let’s look at why that might be.
Why has my tax code been changed to 1263L?
The most common reason for the tax code 1263L is an additional allowance for washing work uniforms. If your job requires you to wear a uniform, such as healthcare, retail or hospitality, you will receive the extra allowance for upkeep. However, you may also be receiving an additional allowance for some other allowable expense. If you aren’t sure why you now have tax code 1263L, contact HMRC online.
How can I get a tax code 1263L from HMRC?
If you believe you are entitled to a uniform washing allowance under tax code 1263L, you can apply using a P87 form from HMRC.
Need help figuring out your tax code?
If tax codes send your brain into a spin, contact the best accountant in London for support. If you believe you are entitled to tax code 1263L, get in touch and we can help you make it happen. Green & Peter has been helping individuals and businesses with tax queries, bookkeeping and annual accounts for over 30 years. Call today on 0208 446 8100 or contact us online to ensure you pay the right tax.
