Why is my tax code 481L?

Question

What does it mean and why have I got it?

Answer 1

You must have a benefit in kind on your left hand column or unpaid tax. You should have had a notification from the tax office. Think yourself lucky mine is 296K.

Answer 2

if you multiply the number in your tax code by 10, you'll get the total amount of income you can earn in a year before paying tax  

L means those eligible for the basic personal allowance

Your tax code is worked out via the following steps:

How tax codes are worked out



Step one

Your tax allowances are added up (in most cases this will just be your personal allowance and any blind person's allowance, in some cases it may include certain job expenses).

Step two

Income you've not paid tax on (for example untaxed interest or part-time earnings) and any taxable employment benefits are added up.

Step three

The total amount of income you've not paid any tax on (called 'deductions') is taken away from the total amount of tax allowances. The amount you are left with is the total of tax-free income you are allowed in a year.

Step four

To arrive at your tax code the amount of tax-free income you are left with is divided by 10 and added to the letter which fits your circumstances.

Example

The tax code 117L means:

you are entitled to the basic personal allowance

£1,170 must be taken away from your total taxable income

Answer 3

Only the tax office can answer this question. Ring them and ask them to send you a Notice of Coding - this will show why your code number has been reduced.

Answer 4

it is 481L because you must owe some tax from last year, a usual tax code for this year is 552L I think, you are allowed to earn £5,520 before you pay tax, unfortunately you have to start paying after you have earned £4,810