2016/2017 Tax Code

From April 6th 2016 the amount you can earn before paying income tax is going up and will mean your tax code will change. This is good news for many and will result in less tax being paid.

2016/2017 personal allowance

As of 6th April, there will be only one personal allowance rate which is unaffected by the taxpayer’s date of birth. It will increase by £400, from £10,600 to £11,000. This means that you can earn £11,000 during the 2016/17 tax year before you have to start paying any tax.

2016/2017 tax code is 1100L

The 2015-16 tax code was 1060L and this will change to 1100L from 6th April 2016. If you are employed you should see the changes on your first payslip from your employer.

Why isn’t my tax code 1100L?

Not everyone will have the same tax code and there a number of reasons why your tax code might not be 1100L.

Some of the common reasons why your tax code isn’t 1100L:

  • You have a company benefit like a company car.
  • You have more than one job or source of PAYE income.
  • You have not paid enough tax in a previous year and your tax code has been adjusted to reflect the underpayment of income tax.

Check your 2016/2017 tax code

Some people will receive a form P2 notice of coding from HMRC which will detail how your tax code is made up. If you have any company benefits like a company car you will see these on the P2 notice of coding.

It is really important that you keep an eye on your tax code to ensure it is correct for your circumstances. If the tax office are not told it is wrong in many cases they are not to know otherwise – meaning the onus is on you.

If it is incorrect then you could well be paying too much, or too little tax.

What to do if you think your tax code is wrong

If you think your current 2016/2017 tax code is wrong you can query it with the tax office. You will need to fill in a form P2 which can be found here.

2016/2017 basic rate tax

The upper threshold for 20% basic rate of tax is increasing by £215, from £31,785 to £32,000. This means that you will pay the basic rate of tax on your income up to £32,000.

For example:

Your taxable income = £33,000

Your Personal Allowance = £11,000

£33,000 – £11,000 = £22,000

You pay 20% tax on £22,000

2016/2017 higher rate tax

The upper threshold for paying the 40% higher rate of tax is also rising, by £615; from £42,385 to £43,000. This means that you only pay this rate on earnings over £43,000.

This is positive news for higher rate tax payers with an increase in the amount you can earn before you start paying 40% tax.

2016/2017 tax rebates

We can review your circumstances to find out if you are owed a tax rebate for the 16/17 tax year and the previous three years as well. There are a number of factors that can result in you overpaying tax like not claiming back expenses you have due to your job.

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