What are the tax codes for 2018/19?
6 April is the start of the new 2018/19 tax year. And if you’re an employee in the UK, that means your income tax will change. Tax codes on your pay slip show how much tax you’ll pay – but what do they mean?
Your tax code directly affects the money you’ll take home, so it’s important you understand it. Don’t worry if you’re not sure about your code – we’ll take you through the different UK tax codes for 2018/19.
The main tax codes for 2018/19
If you only work one job and earn less than £34,501 a year, your tax code should be 1185L. This is the case for most employees in the UK.
This means you have a personal allowance of £11,850. Your personal allowance is how much you can earn without paying income tax. For anything you earn over this up to £34,500, you’ll pay 20% of this as income tax.
Here’s a real-life example. If you earn £16,000 over the 2018/19 tax year after any pensions or deductions, £11,850 of this is tax-free. For the remaining £4,150, you’ll pay 20% of it as income tax – that’s £830. So, the total you’ll take home over the year is £15,170.
Don’t worry if you see 1185L M1 or 1185L W1 on your payslip. These are emergency tax codes and this means HMRC works out your income tax every month or every week.
You’ll usually get an emergency tax code when you start a new job and it can mean you might overpay tax. HMRC should refund this though – you won’t just lose out.
If HMRC haven’t updated your tax code and you’ve been at your new job for more than three months, contact them and ask them to correct this.
Other tax codes for 2018/19
If you work one job in Scotland, your tax code should be S1185L. This also means you have a tax-free personal allowance of £11,850.
You might also see a BR tax code if you have more than one job, and you earn more than £11,850 from your main job. This means you’ll pay 20% of your earnings from your second job as income tax – none of it is tax-free.
If you’re married and you transfer some of your personal allowance to your partner with the Marriage Allowance, you’ll see different tax codes. Your tax code will end with either M or N, depending on whether you’re claiming the Marriage Allowance or your partner is.
Less common tax codes for 2018/19
If you work two jobs and earn between £34,501 and £150,000, the tax code for your second job is D0. This tells you that you’ll pay 40% income tax on all your earnings from the second job.
Tax codes starting with K mean you have a negative tax-free personal allowance, so you need to pay more income tax than usual. This happens if you underpaid income tax last year, or you get extra benefits from work you don’t pay tax on.
NT tax codes show you don’t pay any income tax. This is rare – it means you went bankrupt recently or you live abroad but work in the UK.
When you understand what you’re earning for the 2018/19 tax year, you can put together a household budget. Our budgeting guide will show you how.