Tax Rebates & Refunds

Understand the different codes used with tax rebates

October 30, 2010
Posted in Tax Rebates — Written by Jennifer

Filing for tax returns can be a tricky and confusing procedure. The majority of people do not understand the different codes that are used to determine the amount of tax you pay to the government. The HMRC is a body that issues the different tax codes and they inform your employer about the codes after which they can deduct the amount from your income.

Mentioned below are some of the tax codes that can be used to calculate tax.

What are the different types of tax codes?

474L is one of the commonly used tax codes to determine the amount of tax paid by an individual. 348T, 475V and 474P are some of the other kinds of tax codes used in the United Kingdom. It should be noted that all tax codes have a different meaning. The numbers in the codes denote the total income of an individual while the alphabets indicate how the income needs to be taxed.

What do the letters mean?

Every letter in a tax code has a different meaning. For instance, the letter L in 474L stands for working people, while the letters P, V and Y are used for Old Age Pensioners (OAPs). Ensure that you seek professional help if you are unsure about the specific codes being used.

The significance of numbers in tax codes

The numbers that are used in the tax codes help to work out the allowance of the individual. A tax allowance equals to X (10 + 9), in mathematical terms. For instance, if your annual income equals £40,000, then the total amount to be deducted from your income would be 475 (10 + 9) which amounts to £4,759. Therefore, the final income that you get annually would be £35,241.Calculating the taxable amount is easy when you have tax codes.

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