Everyone that works in the UK is given a tax code. Your tax code takes into account any allowances or expenses that you are entitled to and allows your employer to deduct the corresponding amount of tax from your wages. Sometimes your employer can assign you the wrong tax code and often this results in an overpayment of tax. Any overpayment of tax needs to be claimed back from the Inland Revenue and does not usually happen automatically.
What does Tax Code 647L mean?
If you multiple the number in your tax code by 10, you can calculate the amount of your tax free allowance that has been assigned by your employer to your wages. For example:
Take the number from 647L and multiple by 10: 647 x 10 = £6470
This means that your employer has an amount of £6470 as your tax free allowance, the amount you can earn before you need to pay any tax. This is the current tax free allowance in the UK and unless cicrumstances are different it is likely that you should have this amount allowance.
How does your tax code work
Your tax code and the allowance that it assigns you, will enable you to receive a portion of your allowance in each pay packet as oppose to receiving it all in one lump sum. This often works well if you are working the whole tax year, but if you stop working part way through the tax year, due to redundancy or leaving the UK for example, you can often overpay tax and therefore be due a rebate.
Are you on the right tax code?
If you are not claiming any company benefits or receiving any special allowances it is likely that you tax code should start with ‘647’ for the current tax year. Without knowing your unique tax situation it is difficult to say if you are on the right tax code. If you are unsure you can contact you local tax office and ask them to supply you with a tax coding notice which will show how they calculated your tax code.