Tax codes are a hot topic at the moment as HM Revenue and Customs (HMRC) has now emailed or posted notifications of changes to tax codes for the 2022/23 tax year to an estimated 12 million people across the UK.
A tax code is used by an employer or pension provider in order to work out how much Income Tax to take from an individual's pay or pension.
Tax code 1257L will be the most widely used tax code for the 2022/23 financial year and is expected to be unchanged until 2026 as it only replaced the previous tax code - 1250L - for the 2021/22 period.
Most taxpayers receive an updated tax coding notice from HMRC in February or March each year and it's important to make sure it's correct as it is used to calculate how much tax you will pay.
The new tax codes are used after the start of the next financial year on April 6, which means most employees will now be able to check if their tax code is correct on their April payslip.
What Is Tax Code 1257L?
The personal allowance is the amount a UK taxpayer can earn tax free for the tax year, 2022/23, which works out at £12,570.
What the numbers mean
The numbers in an employee’s tax code show how much tax-free income they get in that tax year, this is known as your Personal Allowance.
You usually multiply the number in the tax code by 10 to get the total amount of income they can earn before being taxed.
For example, an employee with the tax code 1257L can earn £12,570 before being taxed. If they earn £27,000 per year, their taxable income is £14,430 (£27,000 - £12,570).
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What the letters mean
Letters in an employee’s tax code refer to their situation and how it affects their Personal Allowance.
The full list of tax code letters and what they mean can be found on the GOV.UK website here.
Here are the most commonly used letters
-
L - For an employee entitled to the standard tax-free Personal Allowance
-
S - For an employee whose main home is in Scotland
-
BR/ SBR - For a second job or pension
-
M - For an employee whose spouse or civil partner has transferred some of their Personal Allowance
-
N - For an employee who has transferred some of their Personal Allowance to their spouse or civil partner
-
T - When HMRC needs to review some items with the employee
Emergency tax codes
The emergency tax codes from 6 April 2022 are:
- 1257L W1
- 1257L M1
- 1257L X
Blind Person's Allowance
Blind Person’s Allowance is added to your yearly Personal Allowance.
Tax year
- 2022 to 2023 - £2,600
- 2021 to 2022 - £2,520
Find out more about Blind Person's Tax Allowance on the GOV.UK website here.
How to check your tax code
The easiest way to do this is to look at your payslip.
One you have a note of your Personal Allowance tax code, you can go to the GOV.UK website and use the online 'check your Income Tax for the current year' service.
This tool, which covers the current tax year, can be used to check your tax code and Personal Allowance, and to see if a tax code has changed.
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Other options available through this online service include allowing users to see an estimate of how much tax they will pay over the whole tax year.
However, the service cannot be used by self-employed workers.
Find out more about making sure your tax code is correct on the GOV.UK website here.
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FAQs
For single taxpayers and married individuals filing separately, the standard deduction rises to $14,600 for 2024, an increase of $750 from 2023; and for heads of households, the standard deduction will be $21,900 for tax year 2024, an increase of $1,100 from the amount for tax year 2023.
What is code 570 on the IRS transcript 2024? ›
Check Your Transcripts
If you see code 570, that means that there is a delay in processing your return. This doesn't necessarily mean that there is anything wrong with your return, but you may receive a request for additional information – including a request to verify your identity.
What is the tax code 766? ›
When an IRS code 766 appears on your 2021 or 2022 tax transcript, that means there is a tax credit on your account from the IRS, which is good news. This tax credit could be the result of a tax refund, overpayment of taxes, or a credit from the current tax year.
What is a tax code used for? ›
Tax codes are the ultimate authority on any tax you are required to pay and provide the basis for everything on your tax return. For example, when you prepare your tax return, the instructions to it generally provide you with all of the information you need.
Will I get a bigger refund in 2024? ›
Bigger tax refunds in 2024
Through the end of February, tax refunds are about 4% higher than last year – although they are still below the recent high of $3,473 in 2022, when pandemic benefits bolstered the typical refund check.
Why is my refund so low in 2024? ›
If a taxpayer refund isn't what is expected, it may be due to changes made by the IRS. These changes could include corrections to the Child Tax Credit or EITC amounts or an offset from all or part of the refund amount to pay past-due tax or debts. More information about reduced refunds is available on IRS.gov.
How long after code 570 will I get my refund? ›
The IRS can take from 45 to 120 days to process your tax refund when IRS code 570 is listed on your account.
Does it really take 9 weeks after identity verification to get a refund in 2024? ›
What happens after I successfully verify? We'll process your tax return. It may take up to 9 weeks to receive your refund or credit any overpayment to your account. However, if we find other problems, we'll contact you again and this may delay your refund.
How long after code 971 will I get my refund? ›
If you see these codes, it is likely that another code 971 will be issued informing you that the IRS has sent another update notice about the status of the review. If the dates beside code 571 or 572 are the same as code 971, your tax refund will likely be received within 3 to 6 weeks.
What is the IRS code 570? ›
refund has been temporarily suspended or delayed. return is being processed. you've had TC 570 on your transcript.
A Code 150 means that the IRS has processed your tax return and added it to its main file.
What is the tax code 150? ›
Bottom Line. IRS code 150 appears on an IRS transcript when the IRS has received a tax return and a record has been added to the IRS system. This code indicates that additional information regarding the finalization of your tax return should be coming soon.
What is the most common tax code? ›
A list of tax codes and what they mean
- L. L is the most common tax code, so let's kick off here. ...
- 0T. But let's do it anyway. ...
- BR. BR means 'basic rate' and is applied to those working a second job. ...
- D0. ...
- D1. ...
- M. ...
- N. ...
- NT.
Description: TC 971 is used to record the issuance of a notice to the taxpayer about various issues, including changes to their account, requests for additional information, or other actions needed from the taxpayer.
What is the tax code 768? ›
IRS code 768 on your tax transcript indicates the amount you will receive in your tax refund due to the Earned Income Tax Credit. The Earned Income Tax Credit (EITC) can provide a tax break of up to $7,000 for eligible taxpayers depending on their income level, how many children they have, and their marital status.
What are the new 1099 rules for 2024? ›
H.R. 7024 would increase the reporting threshold for the 1099-MISC and 1099-NEC from $600 to $1,000 for payments made on or after January 1, 2024. For future years, this threshold would be tied to inflation. The bill would also decrease the reporting threshold for payments of direct sales from $5,000 to $1,000.
Are tax brackets changing in 2024? ›
The Internal Revenue Service (IRS) has released adjustments to tax brackets for 2024, adding thousands of dollars to most marginal tax brackets, and potentially protecting more of your income from taxes next year.
What is the standard deduction for 2024 for seniors? ›
For 2024, assuming no changes, Ellen's standard deduction would be $16,550: the usual 2024 standard deduction of $14,600 available to single filers, plus one additional standard deduction of $1,950 for those over 65.
Are we getting child tax credit in 2024? ›
The child tax credit is a $2,000 benefit available to those with dependent children under 17. For the 2024 filing season, $1,600 of the credit was potentially refundable.
