In the 2013/14 tax year, millions of taxpayers will have the tax code 944L. This tax code applies to anyone who receives the full tax free Personal Allowance and is also the ‘emergency tax code’ for the 2013-14 tax year.
Keep reading to find out everything you need to know about the 944L tax code in 2013 and 2014.
‘L’ tax codes
Your Personal Allowance is the amount of money you’re allowed to earn each year before you pay tax. In 2013 the Personal Allowance increased from £8,105 (in the 2012/13 tax year) to £9,440. This means most people can earn £9,440 before they start to pay any income tax.
If your tax code features numbers and then the letter ‘L’ it means that you were born after 5 April 1948 and you are eligible for the basic Personal Allowance (£9,440) in the 2013-14 tax year.
If your tax code ends in the letter ‘P’ it means that you were born between 6 April 1938 and 5 April 1948 and you are eligible for the full Personal Allowance. If your tax code ends in ‘Y’ it means that you were born before 6 April 1938 and you are eligible for the full Personal Allowance.
Working out your tax code
To work out your tax code, you should first add up your tax allowances. Your tax allowances will most often be just the basic Personal Allowance although you may also have age related allowances or a Blind Person’s Allowance.
You then total up the income you haven’t paid tax on. This may include untaxed savings interest, income from a part-time or second job or company benefits. These are your ‘deductions’ and they are taken away from your allowances.
What is left is the amount you can earn in the tax year before you pay any income tax. To work out your tax code you should divide this number by 10 and add the letter which fits your personal circumstances.
For example, a 944L tax code means that you are eligible for the basic Personal Allowance (£9,440) and that you have no deductions to take into account.
Why 944L may be your ‘emergency’ tax code
If HMRC doesn’t have sufficient information about your income, they can’t send your employer or pension provider a correct tax code. In this situation, they will issue an ‘emergency tax code’. An emergency tax code is used on a temporary basis while HMRC establish what your correct tax code should be.
If you have an emergency tax code it will ensure that you receive the basic tax free Personal Allowance (£9,440 in tax year 2013/4). However, it doesn’t take any other allowances into account.
The emergency tax code is set each year by HMRC and is a number followed by the letter ‘L’. In the 2013-14 tax year, the emergency tax code is 944L.
If you have the 944L tax code it doesn’t mean you are on an emergency tax code. For example, if you are eligible for the basic Personal Allowance and have no deductions you may have the same tax code.