Tax codes are given to employers by HMRC to show them how much Income Tax should be deducted from your earnings. They show the employee’s allowances, the benefits they receive and the amount of tax they have to pay. As an illustration, the standard UK tax code is 1257L which allows you to earn £12,570 without being taxed. If your code is not right, it could result in you overpaying or underpaying tax. You should occasionally review your code and inform HMRC if you notice any errors. They base your take-home pay on your tax code.
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