Published On: Tue, Apr 9th, 2024

HMRC tax code to watch out for that could deliver a £900 saving to millions is revealed | Personal Finance | Finance

The payslip tax code which identifies the 27 million people entitled to a typical £900 cut in annual National Insurance payments has been identified.

People who see the code 1257L on their monthly pay notice are in line for the reduction, according to HMRC.

The Chancellor Jeremy Hunt cut National Insurance on pay from 12 percent to 10 percent last Autumn and then lowered it again to 8 percent in his Spring budget.

The net effect of these reductions was to reduce NI charged on the salaries of working people.

The exact figure depends on the salary of the individual, however for someone earning £35,000 it equates to a total saving of £900 a year.

Significantly, the NI savings are only available to those people who are working and earn above the lowest tax and NI threshold of £12,570 a year.

There has also been a reduction in the NI charged to people who are self-employed. As a result an average self-employed person on £28,000 will see a tax cut of £310 a year.

The tax codes of individuals will vary if people have underpaid or overpaid tax in the last financial year. In this case workers will see their tax payments vary through the year to make good these under or over payments.

The changes came into effect on 6 April.

A study by financial services firm Canada Life revealed that 31 percent of adults are likely to have been given an tax code, with the average overpayment totalling £689.

If you’re due cash back, you should be able to claim this online via GOV.UK using your Government Gateway user ID and password.

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