HMRC reaching out to inform you your tax code has changed can lead to a feeling of dread and anxious questions about why it’s changed. Do you owe HMRC more tax? Has your tax-free Personal Allowance decreased?

It’s not all bad though, because a changing tax code can sometimes be good news, and mean that your Personal Allowance (the tax free amount you can earn in a tax year) is increasing – so you’ll pay less in tax and take more money home.

That’s exactly what the 1263L tax code is – a nice little tax-saver. We’ll discuss exactly how much the 1263L tax code saves you, along with who qualifies for it.

How do I find my tax code?

Before we get into what the 1263L tax code is, it’s good to know where you can find your tax code to ensure you have the correct one!

Your tax code tells your employer how much income tax to deduct from your wages, so you can find it by:

• Checking your pay slip
• Logging into your personal HMRC tax account (you’ll need your government gateway ID and password for this)
• Going to your HMRC app
• Checking your P60 or P45

If you don’t have any access to these documents, you can call HMRC (you will need your National Insurance Number on you to do this).

We’d recommend checking your tax code regularly, especially if you have a new employer, or you’re newly employed after self-employment when it’s common to be put on an ‘emergency tax code.’

This means you’ll be taxed 20% on all your income until HMRC have the correct details about how much you earn, and how much tax you’ve paid in the tax year so far.

What does it mean if my tax code is 1263L?

As you’ve probably guessed from the intro, having a 1263L tax code is actually a good thing. This means you don’t owe any additional taxes to HMRC (phew), in fact, it’s quite the opposite. Your tax-free Personal Allowance has increased.

The standard tax code you’re probably familiar with is 1257L, which is based off the tax-free personal allowance of £12,570. This refers to the fact that you can earn up to £12,570 in a tax year before starting to pay income tax on your earnings.

The 1263L tax code, is similar to 1257L, but it means you earn £12,630 before you begin to pay income tax. Saving you approximately £60!

Why has my tax code been changed to 1263L?

Your tax code will normally change to 1263L if you’re eligible for HMRC’s flat rate expenses for the costs and maintenance of your work uniform. It means that you’re receiving tax relief (so you’ll pay less tax) in order to cover the upkeep of the uniform you must wear for work.

If that isn’t the case, it’s usually because you’re entitled to some other type of allowable expense or deduction.
 

How do I apply for a 1263L tax code?

In most cases you’ll apply to HMRC via a P87 form for ‘washing of uniform allowance’. Once your application has been approved, you should receive confirmation from HMRC that your tax code is now changing.

You don’t have to apply for this each year, and your tax code should remain the same unless you reach out to HMRC and tell them you no longer need any allowable expenses. They can also change your tax code if they have reason to believe you’re no longer in need of any allowances (such as starting a new job with a different employer).

How can I change my 1263L tax code?

Simply contact HMRC online to change your tax code, or give them a call if your circumstances change. It’s important to keep HMRC in the loop when things do change, so you pay the right taxes!

 
Need help figuring out your tax code? We can help! Talk to one of the team on 020 3355 4047, or get an instant quote today.