Tax Codes Could Mean Huge Tax Bills

14 March 2012

Tax codes are due out in the next few weeks for the tax year 2012-2013 and you should ensure that yours is correct to avoid having a huge tax bill for underpaid tax next tax year.  You should never rely on HMRC or even your employer to get your tax code correct. 

The tax code is used to calculate the amount of tax deducted from your wages.  The code will change if, for instance, you have recently started a new job, received a company car or other work related benefits or started drawing your pension. 

The personal allowance for 2012-2013 is £8,105.  There are two common letters for people in work, being:

L for those eligible for the basic personal allowance, and

K for those who have extra untaxed income, such as a company or state benefits.

There are various different rules for those in full time work, those with multiple incomes and those if you are a pensioner.

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