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Most
employees are entitled to an amount of tax-free pay each year (the personal allowance) which is determined by the individual's tax code. The most common form of tax code is made up of a number followed by a letter, eg 603L. Simply add the figure 5 as a final digit to the number in your tax code (eg 6035) and this is your tax free pay for the current year, ie £6,035. Thereafter, the tax rates are as follows:
Annual
earnings bands
|
Rate
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| First £34,800
of taxable income: |
20%
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| Above £34,800
of taxable income: |
40%
|
Other forms of tax code which start with a letter denote different
tax allowances or tax rates.
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