The 2015/16 tax year begins on 6th April 2015 and for most employees, the new standard tax code will be 1060L. This post explains what this tax code means and what to do if you think you’re on the wrong tax code.
Update (05/04/16): This tax year has now ended! Check out our new guide for tax codes for 2016/17
What does the 1060L tax code mean?
Your tax code tells you the amount you can earn in each tax year before paying tax. A 1060L tax code means you can earn up to £10,600 per year tax free, which is an increase of £600 from 2014/15. If you are paid monthly the first £833 won’t be taxed and if you are paid weekly you can earn up to £204 per week before being taxed.
How much tax will I save with the new tax code?
If you’re a basic rate taxpayer, a £600 increase in your personal allowance will save you £120 in tax per year.
Will I receive confirmation of my new tax code from HMRC?
You should receive a PAYE Coding Notice from HMRC shortly after the start of the new tax year. Your employer will also receive a P9 Tax Code Notice 2015/16 which will inform them of the new tax code to use from 6th April. You should check your first payslip after 6th April to ensure that the correct tax code has been applied. If your employer is using an incorrect tax code which results in you not paying enough tax, it will be you who will be liable to pay any additional tax at the end of the year!
What to do if your tax code isn’t 1060L
Although 1060L is the standard tax code, it doesn’t apply to everyone. Each tax code can differ based on individual circumstances. Below are some of the most common reasons why you may not have a standard tax code.
- You have more than one job.
- You have taxable benefits (such as health insurance or company car).
- You have underpaid tax in previous years and HMRC are collecting it through a reduction in your personal allowance.
- You are being emergency taxed.
If none of the above applies to you and your tax code isn’t 1060L, you should complete the online Coding Notice Query form on the HMRC website. You should receive a response within 15 days.
Will I automatically get a rebate for the previous tax year?
HMRC will usually perform an end of year reconciliation to ensure you have paid the right amount of tax. However this is not done for all taxpayers. For example, if you are entitled to claim specific tax reliefs (such as uniform tax allowances or business mileage), these are not usually provided automatically and need to be claimed.
At present, it is possible to claim tax relief for the last 4 tax years (but remember there are time limits for claiming back overpaid tax). If you are not sure what you can claim, you can use our tax refund calculator to get an estimate of any extra tax rebate you may be due.
I still don’t understand tax codes/tax rebates/allowances, can you help me?
We’d love to! It’s what we do. If you need any help understanding your tax position or to find out if you are overpaying tax, please contact us via email or call us on 01473 760359 for free advice! Alternatively, leave a comment below and we’ll do our best to help!