On the 6th of April each year the tax codes change to reflect the new personal allowances, or how much you can earn before paying tax or tax at different rates. The basic rate tax code for 2018 – 2019 is 1185L.
This basically means you can earn £11850 during the year before you start to pay tax at the basic 20% rate.
During the next few weeks HMRC will issue letters with your new PAYE tax coding. It is actually important to check your code and ensure it is correct, especially if you have received a tax refund in the past. HMRC have the tendency to assume that any expenses you claimed for before will be exactly the same every year – which is utter nonsense!
Unfortunately, if your tax code is incorrect you could end up paying too much, or worse, too little tax. If you pay too little tax HMRC WILL claw it back, even though it’s partly their fault for giving you the wrong code!
As a client of ours, part of our service is to deal with HMRC on your behalf and make sure you pay the correct tax. However, even though we are your tax agent, HMRC DO NOT tell us your tax code, so do please look out for any changes and let us know immediately so we can have it corrected.
You can find out more about our self-assessment tax returns services or just give us a quick call – we’re always happy to answer any questions you may have.