2018/19 Tax Codes

HMRC have announced that the 2018/2019 tax code will change from the year before.

2018/2019 tax code is 1185L

The 6th April 2018 is the date that your new tax code will start being used by your employer or other source of income.

What is my new tax code?

Your new tax code will probably be 1185L or similar. It can be higher or lower depending on your own set of circumstances.

What does the 1185L tax code mean?

 The quick answer is it means you should pay less income tax.

2018/2019 tax code example

If you have the new tax code of 1185L and pay tax at the basic rate you will pay tax as follows:

Your taxable income = £34,000

Your Personal Allowance = £11,850

£34,000 – £11,850= £22,150

You pay 20% tax on £22,150

The table below shows the increase in the 2018/2019 tax free personal allowance, basic rate limit and higher rate threshold.

2017-18 tax year 2018-19 tax year
Personal Allowance £11,500 £11,850
Basic Rate limit £33,500 £34,500
Higher rate threshold £45,000 £46,350

Why do I get a new tax code?

Part of your tax code refers to the Personal Allowance amount that you are entitled to earn before you start paying tax on your income. This Personal Allowance changes annually at the start of the tax year, so everyone’s tax code must change to reflect this. This makes sure that you are paying the correct amount of tax on the right amount of income.

How do I find out what my tax code is?

HMRC send taxpayers a ‘PAYE notice of coding’ to let you know what your new tax code is. This is otherwise known as a Form P2 and it is important to check yours when it lands in the post. It includes other information that affects how much tax you pay, like flat rate expenses and company benefits.

HMRC do a great job of administering our hugely complex tax system, but even they make mistakes at times. You must check all the details on your P2 and flag up anything you think is wrong to HMRC. At the end of the day, the person most affected by an incorrect tax code is you and you are the one left either paying too much tax, or with extra tax to pay.

If, for some reason, you don’t get a P2 notice of coding then you can ask HMRC for the details of how your tax code has been calculated. You can also find your tax code details in your online personal tax account.

My tax code isn’t 1185L what should I do?

You need to check your tax code against your individual circumstances because they are not the same for everybody. Even people doing the same PAYE job could have a different tax code if other elements of their financial situation are different.

For example, if you have another income source like from a  pension scheme, more than one job, your code is altered to account for previous year’s tax payments or you get a taxable company benefit like a company car.

Is this the same in Scotland?

No, if you live and work in Scotland, you are now under the Scottish Rate of Income Tax (SRIT). The Scottish government is now allowed to set their own rates and bands of income tax for all income other than savings and dividends (this is still subject to UK tax). You are still entitled to the Personal Allowance, so you will still receive a new tax code at the start of the new tax year. But you need to check the bands and rates of income tax for Scottish Rate of Income Tax, not the UK figures, to make sure you are paying the correct amount.

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