Are you one of the millions of people whose tax code for 2014/2015 is 1000L? If you pay your tax through PAYE and you receive the full tax free Personal Allowance, this may well be your tax code for the 2014/2015 tax year. 1000L is also the ‘emergency tax code’ for the 2014/2015 tax year. Watch the following 2 minute video and read this article to find out everything you need to know about the 1000L tax code
The 1000 in your tax code
Your Personal Allowance is the amount of money you’re allowed to earn each year before you pay tax. On April 6, 2014 the Personal Allowance increased from £9,440 to £10,000. This means that most people can earn £10,000 before they start to pay any income tax.
The number in your tax code helps you to work out what your Personal Allowance is. You simply multiply the number on your tax code by 10.
In the 2014/2015 tax year, many people will have the tax code 1000L. This means you can earn £10,000 – the basic Personal Allowance – before you have to pay any income tax.
‘L’ tax codes
If your tax code features numbers and then the letter ‘L’ it means that you are eligible for the basic Personal Allowance (£10,000) in the 2014/2015 tax year. Your tax code may be 1000L.
If your tax code ends in the letter ‘P’ it means that you are between the age of 65 and 74 and you are eligible for the full Personal Allowance (tax code 1000P). If your tax code ends in ‘Y’ it means that you are over the age of 75 and you are eligible for the full Personal Allowance (tax code 1000Y).
Why 1000L may be your ‘emergency’ tax code
If HMRC doesn’t have sufficient information about your income, they may issue your employer or pension provider with an ‘emergency tax code’. An emergency tax code is used on a temporary basis while HMRC establish what your correct tax code should be.
If you have an emergency tax code it will ensure that you receive the basic tax free Personal Allowance (£10,000 in tax year 2014/2015). However, it doesn’t take any other allowances into account.
The emergency tax code is set each year by HMRC and is a number followed by the letter ‘L’. In the 2014/2015 tax year, the emergency tax code is 1000L.
However, if you have the 1000L tax code it doesn’t mean you are on an emergency tax code. For example, if you are eligible for the basic Personal Allowance and have no deductions you may have the same tax code.