What is the 2019/2020 tax code?

In 2019-20 tax year, the Personal Allowance amount is going up to £12,500. The numbers section of tax codes record this number. So, in the next tax year, the basic code for employees is:

1250L

The 1250 part means a tax free Personal Allowance of £12,500 and sees an increase from the 2017/2018 tax year.

The tax free personal allowance is the figure you are allowed to earn before paying income tax. Changes to the tax free Personal Allowance are usually announced in the Autumn Budget, so there is plenty of advance warning of the new figures ahead of time.

When does the new 2019/2020 tax code start?

Tax codes run for the duration of a tax year; that’s the 6th April in one year, to the 5th April the following year. So the 1250L tax code comes into effect from 6th April 2019 and stays the same until 5th April 2020.

Your tax code can change during the tax year as well, for reasons like a change in your company benefits or you have made a claim for work expenses.

What do the letters in the 2019/2020 tax code mean?

You may have letters at the start or the end of your tax code and they all have their own meaning. For example:

L: Basic rate taxpayer in England
S: Scottish income taxpayer (prefix)
C: Welsh taxpayer (prefix)
OT: You have no tax allowances because you earn over the designated threshold
M: You benefit from the Marriage Allowance (suffix)
N: You have transferred your unearned allowance to your partner under the Marriage Allowance scheme (suffix)

These are some of the more commonly used letters in tax codes. There are others that all have their own specific meaning.

Do you know what your tax code is changing to?

Most people don’t check their tax code, especially if they are paid through PAYE by their employer. But it is hugely important to your financial life. If your tax code is wrong, then you are paying the wrong amount of tax. Either too little and you owe HMRC the difference, or too much and you are entitled to a tax rebate.

Although HMRC are the authority and administrators of our tax system, it remains the individual taxpayer’s responsibility to ensure they are paying the right amount of tax. The easiest place to start is with your tax code.

Why does my tax code change every year?

Your tax code changes every year because part of the code tells your employer how much you can earn before you need to pay any income tax. This is called the Personal Allowance and it is the same for everyone in the UK.

How do I get my new 2019/2020 tax code?

You may get a P2 Notice of Coding from HMRC which tells you your new tax code. If you are an employee, your employer will be sent your new tax code by HMRC and then it will appear on your payslips.

Should my tax code be the same as my colleague’s, if we’re doing the same job?

Not necessarily, even if you’re doing the same job, you may not have the exact same tax code as your colleagues. This is because you may also have the Marriage Allowance and they don’t, or they get additional income from a pension and you don’t.

There will be many other taxpayers with the same code as you because they have the same overall financial situation, not because they are in the same job earning the same wage.

Are the tax brackets also changing in 2019-20?

Yes, there are changes to the income tax brackets for the 2019-20 tax year.

In Scotland they will be:

• Starter Rate of 19% on earnings between £12,500 and £14,549
• Scottish Basic Rate of 20% on earnings between £14,549 and £24,944
• Intermediate Rate of 21% on earnings between £24,944 and £43,430
• Higher Rate of 41% on earnings between £43,430 and £150,000
• Top Rate of 46% on earnings of £150,001 and above

In England, Wales and Northern Ireland they will be:

• Basic Rate of 20% on earnings between £12,500 and £50,000
• Higher Rate of 40% on earnings between £50,000 and £150,000
• Additional Rate of 45% on earnings of £150,000 and over

What should I do if I think my tax code is wrong?

The most important thing is to do something straightaway. Don’t ignore it and imagine that HMRC will notice and fix it. It’s your responsibility to maintain the accuracy of your tax position. You can give HMRC a call directly. They will check it for you and help you rectify any issues.

If you have any job related expenses you can get in touch with one of our experts. We can check your tax code and make sure that you are being as tax efficient as possible.

For example, are you claiming all the work expenses tax reliefs you are entitled to? No, they’re not just for self employed taxpayers. We can investigate further and, if it turns out that HMRC owe you, we can take you through the tax rebate process with the minimum of fuss.