What Is Tax Code 1257L?

A tax code of 1257L gives you an allowance of £12,570 per annum before you start paying tax. When you start earning over the personal allowance you will pay 20% tax on your taxable earnings up to a limit of £50270.

The percentage of tax you pay then increases to 40% on earnings over £50271 up to £150,000. A top rate of tax is then introduced from £150,001 at 45%.
If you’re employed full-time, part-time, or receiving a private pension you will have received a letter from HMRC with an updated tax coding earlier this year.

Usually around Feb/March, HMRC sends a letter that reveals your tax code for the new tax year (new tax year started on the 6th of April 2023).

The 1257L tax code received from your employer can be broken down as below :

The number 1257 means that you can earn 12,570 before you pay income tax.

The letter L means that you are entitled to a standard personal allowance.

Tax code 1257L is the most common tax code for the tax year 2023/24. With the freezing of personal allowances in the Spring Budget 2023, it is expected to remain unchanged until 2028.

It replaces tax code 1250L, which was the most popular tax code in the UK for the tax years 2019/20 and 2020/21.

In Wales, the equivalent tax code is C1270L and in Scotland, it is S1270L.
Your tax code is important as it is used to calculate how much tax you will pay.

The below table breaks down various tax rates and corresponding income slabs for financial years 2023/24 and 2022/23.

How Much Tax Will You Need To Pay With Tax Code 1257L?
The 1257L tax code is a cumulative code. That means you’ll receive a portion of your personal allowance every time you get paid.

For example, if you are paid monthly, you’ll receive £1,047.50 (£12,570 ÷ 12) tax-free each month you get paid. That way by the end of the tax year, you’ll have received your personal allowance in full.

Earnings above this are taxed at 20%. This is for earnings between £12,571 and £50,270.

After this, it increases to 40% for earnings between £50,271 and £125,140 (The tax year 2023/24).

Earnings over £125,140 are then taxed at the highest rate which is 45% (Tax year 2023/24).

If you took a few months of work and had no other job during the tax year, you’ll receive all the personal allowance you are owed in your first payslip if you start a new job. Your employer will know what code to use when you give them your P45.

Note, Scotland has introduced its own tax rates which are slightly different from those stated above.

What to do if your tax code is wrong
The tax office or HMRC is the government department that manages tax codes and is who you will need to contact to make any alterations to your code.

Phoning HMRC isn’t always the quickest or easiest way to highlight and fix any coding errors or to question how your tax code has been created.

You can check your tax code online and follow the instructions on how to make amendments.

An early adjustment to your code is recommended because it limits the amount of incorrect income tax you will pay.