Tax Rebates & Refunds

Understanding what your tax code means

May 13, 2011
Posted in Tax Rebates — Written by Chris

A tax code is used by the pension provider or employer for calculating the tax amount that is to be debited from your pension or income. In case you have been placed under an incorrect tax code you may end up paying more tax than is actually required. Your tax code is made up of a letter and numbers. K497 and 117L are some examples of what your tax code will look like.

If the tax code has a number after a letter, you can replace the letter with ‘9’. This will give you the overall amount of your earning for the year prior to making tax payment. For instance, tax code 234L will mean that your income prior to paying tax is 2349. The letter in the tax code determines how the number needs to be adjusted after changes in allowances.

The meaning of letters in different tax codes

Your tax code can have different prefixes such as L, P, T, Y and K.

The prefix L
It is assigned for individuals with basic personal allowances. For instance, 747L is for the financial year 2011-12. It is also used for displaying the ‘emergency tax code’.

The prefix P
It is for individuals aged from 65-74 years who are eligible to get personal allowances.

The prefix Y
It is assigned to individuals above 75 years of age who are entitled to get full personal allowances.

Other tax codes include; NT, D0, D1 and BR. If you feel that you have overpaid on tax, do not hesitate to file for a tax refund.

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