Tax Code Thread...

[DanBoy]

My tax code is 474L MT1.

Can anybody tell me what this means?

I've been with my employer for four months and I'm sure I'm paying too much tax.

[Eric Mc]

474L means your tax allowances (the amount you earn which is not taxed) comes to £4,745 per annum. It is the standard personal allowance amount for an individual.

The Income Tax bands are as follows:

First £4,745 - tax free
Next £2,020 - taxed at 10%
£2,021 to £31,400 - taxed at 22%
Everything above £31,400 - taxed at 40%

Not everyone has a 474L code. Older people get additional allowances based on age and people who have Benefits in Kind (company cars, company health insurance etc) have their codes reduced.

[victormeldrew]

The 474 indicates your tax allowance, something like £4749 before tax.
Dunno about the L, mines always been H.
The MT1 means you are on a month 1 basis (you must be a new starter). This might mean you are paying more tax than other on a similar code.

[Eric Mc]

The L stands for "Lower". The H stands for "Higher". It's a historic anachronism now as the Lower Personal Code applied to Single People and the Higher Personal Allowance to a married individual. Married people were entitled to an extra allowance. This additional allowance was abolished in tax year 2000/01.

[victormeldrew]

Yup, I have always been married. Or it seems like it anyway!