In today’s world, we’re always under pressure to find the best ways to earn some extra cash. Whether it be from work, or even from our social media accounts! In this article, we’ll look at four of the most popular UK tax codes for you – and what they stand for.
What are UK tax codes?
There are many different tax codes in the UK, but they all follow a similar structure. Each year, you must file your taxes using a tax code that corresponds to your income level. The most common tax codes in the UK are 10, 11, 12, 22, 40 and 41. These codes represent different income levels and correspond to the amount of tax you will pay.
For example, if you earn £10,000 per year, you would file under code 10. If you earn £100,000 per year, you would file under code 41. To find out which code applies to you, use the Income Tax Calculator on HMRC’s website. You can also find out more about tax codes on the HMRC website.
How do tax codes work in the UK?
Tax codes are used in the UK to help taxpayers identify their tax obligations. Each taxpayer is assigned a tax code based on their income and other factors.
Here is a list of the UK tax codes and what they mean for you:
Basic rate taxpayer: Taxable income between £11,850 and £22,950 (or £10,000 and £20,000 if you are married filing jointly) will be taxed at the Basic rate of 20%.
Higher rate taxpayer: Taxable income above £22,950 (or £20,000 if you are married filing jointly) will be taxed at the Higher rate of 40%.
Income tax credits: You may be able to claim income tax credits if your taxable income is lower than your personal allowance. Your personal allowance is currently £11,850 for singles and couples filing jointly, or £5,500 for individuals. You can find out more about income tax credits on the HMRC website.
National Insurance contributions: You must pay National Insurance contributions (NICs) based on your taxable income. Your National Insurance number corresponds to your tax code. Find out more about National Insurance on the HMRC website.
Am I eligible for a tax code?
The tax code system in the UK is a complex one, with a wide range of tax bands and rates. To simplify things for you, we’ve created this handy guide to show you what each code means, and what you’re eligible for.
If you’re not sure which code to use, or if you’re struggling to understand your tax bill, then read on for some tips on how to get the most out of your code.
List Of Tax Codes and What They Mean for You in UK
List Of UK Tax Codes:
00 – Standard rate tax (SRT) – This is the basic tax rate that all taxpayers pay, regardless of their income. The maximum amount that can be earned before paying SRT is £37,450 per year.
01 – Higher rate tax (HRT) – This applies to individuals who earn over £41,850 per year. The HRT rate is 40%.
02 – Additional rate tax (ART) – This is the higher of the two standard rates, and it applies to individuals who earn over £150,000 per year. The additional rate is 50%.
Why get a tax code?
A tax code is a unique identifier for a business or individual in the United Kingdom.
When you file your taxes, you need to provide your tax code. Your tax code will determine your income tax rate, and whether you are required to file a return.
Tax codes are also used when receiving government benefits and subsidies, or when applying for jobs. Knowing your tax code can help you avoid delays or problems with your taxes.
There are many different tax codes in the UK, and each one has a different meaning.
Here is a list of all the UK tax codes, and what they mean for you:
- AB11 – This tax code is used by businesses with an annual turnover of less than £11 million (US$16 million). These businesses don’t have to pay income tax, but they do have to pay corporation tax (a type of business tax).
- AB21 – This tax code is used by business with an annual turnover in UK between £11 million and £50 million (US$16 million and US$68 million). These businesses have to pay income tax and corporation tax, but they don’t have to pay VAT (value-added tax ) or national insurance contributions (NICs).
- AB22 – This tax code is used by businesses with an annual turnover of between £50 million and £100 million (US$68 million and US$128 million). These businesses have to pay tax, corporation tax, capital gains tax and NICs.
- AB88 – These are private businesses that are VAT-registered but don’t operate in the UK. They may also be international companies (outside the UK) that supply their goods or services to the UK market through a representative office or from a website based in the UK.
- B1 – Businesses with an annual turnover between £41m and £150m (US$59m and US$243m) are exempt from tax(VAT) if they meet certain conditions, including submitting a VAT return.
Conclusion
If you’re looking to expand or start a business in the UK, it’s important to know the tax codes that apply to you. This list of UK tax codes will show you what each one means for your business and how it should be accounted for when preparing your taxes. By knowing which code applies to you, you can ensure that all of your business dealings are done in a legal and compliant manner.