Do you have the tax code 944L? If so, you’re not alone. 944L is one of the most common tax codes in the 2013-14 tax year and will apply to you if you receive the full Personal Allowance. It may also apply to you if you’re on an emergency tax code.
Keep reading to find out everything you need to know about tax code 944L – the new tax code for 2013/14.
Tax code 944L
Does your tax code feature numbers and the letter ‘L’? If so, it means that you are eligible for the basic Personal Allowance in the 2013-14 tax year.
Your Personal Allowance is the amount of money you’re allowed to earn each year before you pay tax. In the 2013/14 tax year the Personal Allowance increases from £8,105 to £9,440 as part of the government’s pledge to increase the Personal Allowance to £10,000.
This means that you are able to earn £9,440 before you start paying income tax.
If your tax code ends in the letter ‘P’ it means that you are aged 65 to 74 and eligible for the full Personal Allowance (£10,500 in the 2013/14 tax year). If your tax code ends in ‘Y’ it means that you are aged 75 or over and eligible for the full Personal Allowance (£10,660 in the 2013/14 tax year).
How you work out your tax code
Working out your tax code is a four step process:
- Add up all your tax allowances – this will include your Personal Allowance and any other allowances you are eligible for (for example age related allowances or Blind Person’s Allowance)
- Add up your deductions (all the income you have not paid tax on) – this can include income from a second job, savings interest or company benefits
- Subtract your deductions from your allowances
- Divide this number by ten and add the letter which fits your personal circumstances
For example, in the 2013/14 tax year you may qualify for the basic Personal Allowance and have no deductions. This means your tax code would be 944L.
Your tax code means that the amount of tax free earnings you are entitled to is spread equally throughout the year. This results in you receiving roughly the same amount of take home pay (or pension) every week/month.
Emergency tax code 944L
Sometimes, HMRC will issue you with an emergency tax code. This happens when they don’t have enough information about you to send your pension provider or employer your correct tax code.
An emergency tax code will ensure that you receive the basic tax free Personal Allowance. However, it doesn’t take any other allowances into account.
The emergency tax code changes each year and is a number followed by the letter ‘L’. In the 2013/14 tax year, the emergency tax code is 944L
Bear in mind that if you do have the tax code 944L it doesn’t necessarily mean that you are on an ‘emergency’ tax code. While the emergency tax code for 2013-14 is 944L, if you have this code it doesn’t automatically mean that you’re on an emergency code.