May, 2016

5 Things You Should Know About the 1100L Tax Code

Tax Codes phone tax formIn April 2016, the main UK tax code changed. Our guide tells you everything you need to know about the brand new 1100L tax code.

Keep reading to find out more.

  1. The 1100 reflects the change in the Personal Allowance

Your Personal Allowance is the amount that you can earn each year before you have to pay income tax. In the 2015/16 tax year this amount was £10,600 but in the 2016/17 tax year it will rise to £11,000.

  1. Most people will have the tax code 1100L in the 2016/17 tax year

The rise in the Personal Allowance to £11,000 means that most people can earn £11,000 before they start to pay any income tax.

1100L is the current tax code for most people born after 5 April 1938 and the 1100 refers to the tax-free Personal Allowance (£11,000) divided by 10.

  1. The letter L means you are eligible for the full Personal Allowance

If your tax code includes the letter L this means that you are eligible for the full tax-free Personal Allowance. In the 2016/17 tax year this is £11,000.

Your tax code may contain a different letter. Some of the common letters include:

  • M – you have received a transfer of 10% of your partner’s Personal Allowance
  • N – you’ve transferred 10% of your Personal Allowance to your partner
  • S – your salary/pension is taxed at the Scottish rate of income tax
  • Y – you were born before 6 April 1938 and are therefore entitled to a larger Personal Allowance
  1. Why you might not have the tax code number 1100

If you are eligible for the full tax-free Personal Allowance and you were born after 6 April 1938 you will probably have the tax code 1100L in 2016/17.

However, the numbers on your tax code could be different, for example if:

  • You haven’t paid income tax on part of your income (for example income from a second job)
  • Your employer provides other taxable benefits (for example healthcare or a company car) which have not been taxed
  • You have to pay tax that you owe from a previous year
  1. Why 1100L X could be your emergency tax code

If you have changed jobs and you haven’t provided your employer with a P45 from your previous job then you may be put on an ’emergency’ tax code. In the 2016/17 tax year, 1100L X is the most common emergency tax code.

Emergency tax codes are temporary. While you’re on an emergency tax code, you pay tax on all your income above the basic Personal Allowance (£11,000 for the 2016 to 2017 tax year). However, it doesn’t take into account any other allowances that you may be eligible for and so you should try to get onto the correct tax code as quickly as you can.