HM Revenue & Customs (HMRC) is set to implement significant changes to income tax codes from April 2024, affecting millions of UK taxpayers. The move aims to streamline the PAYE system but could cause confusion for workers across the country.
What's Changing?
The tax authority will introduce new tax codes starting with '1257' for most employees, replacing the current '1257L' code. This change reflects the government's decision to freeze income tax thresholds until 2028.
Who Will Be Affected?
The alterations will impact:
- Employees on PAYE
- Pensioners receiving workplace pensions
- Those with multiple income streams
Why the Change Matters
While the adjustment might seem minor, it carries important implications:
- Tax codes determine how much income tax you pay each month
- Incorrect codes could lead to under or overpayment
- The changes coincide with frozen tax thresholds
What You Need to Do
HMRC will automatically update tax codes for most employees. However, experts recommend:
- Checking your first payslip after April 2024
- Reviewing your tax code if you have multiple jobs
- Contacting HMRC if you suspect an error
The changes come as inflation continues to squeeze household budgets, making tax efficiency more crucial than ever for UK families.
