Your tax code determines how much tax is deducted from your pay. While 1257L is the most common, different letters and numbers can affect how much you owe. From marriage allowance to emergency codes, here’s how to decode what HMRC assigns you.

Your tax code is basically a set of letters and numbers that show whether you are entitled to the annual tax-free personal allowance (the amount you can earn without paying tax). These codes are updated each year and help your employer figure out how much tax to take off your pay.

For the current and next tax years, the standard personal allowance is £12,570, and if you are entitled to this, your tax code will likely be 1257L. This is the most common code and applies to people with one job, no untaxed income, and no taxable benefits like a company car.

But tax codes are not always that straightforward. There are all sorts of other letters and numbers that might pop up. For example, if you are claiming the marriage allowance, your code might have an "M" in it. If you are paying tax at the Scottish rates, your code will start with an "S." And if your personal allowance gets reduced for some reason, like unpaid tax or income adjustments, your code will change accordingly.

Then there are the emergency tax codes—W1 or M1—which are used when someone starts a new job and does not have a P45 yet. These codes mean your tax will be calculated based on just that specific pay period, rather than your full income.

If you spot a 'K' at the start of your tax code, it means deductions (for things like company benefits, state pension, or previous tax owed) are greater than your personal allowance. Your tax deduction won’t be more than half of your pay or pension.

From 6 April 2025, the remittance basis of taxation will be scrapped in favour of a residence-based system. A new 4-year Foreign Income and Gains regime offers tax relief for new arrivals, while transitional measures aim to ease the shift. Here’s what’s changing.

Effective from 6 April 2025, the remittance basis of taxation for non-UK domiciled individuals will be replaced by a simplified, residence-based tax regime.

Additionally, the government will introduce a 4-year Foreign Income and Gains (FIG) regime. Under this regime, individuals newly arriving in the UK who choose to participate will receive full relief (100%) on foreign income and gains during their first four years of UK tax residence, provided they have not been UK tax resident in any of the preceding 10 consecutive years.

As a transitional measure for Capital Gains Tax (CGT) purposes, individuals who have previously used the remittance basis will have the option to rebase personally held foreign assets to their value as of 5 April 2017, provided certain conditions are met.

Furthermore, Overseas Workday Relief will be extended to cover a 4-year period, in line with the new 4-year FIG regime. This change will eliminate the need for individuals using this relief to keep their employment income offshore. From 6 April 2025, the maximum amount of Overseas Workday Relief that can be claimed annually will be the lesser of £300,000 or 30% of the individual's net employment income.

A new Temporary Repatriation Facility (TRF) will also be introduced from April 2025 for a 3-year period. This facility will allow individuals who have previously been taxed on the remittance basis to designate and remit foreign income and gains that arose prior to the reform, at a reduced rate. This includes foreign income and gains held within trust structures that have not been attributed. The TRF will offer a rate of 12% for the first 2 years, and 15% in the final year of its operation.

From 6 April 2025, employers will face a 1.2% rise in National Insurance contributions, alongside a lower NICs threshold. However, an increased Employment Allowance aims to ease the burden for small businesses. Here’s what you need to prepare for these key changes.

The main rate of secondary Class 1 NICs will rise by 1.2%, from 13.8% to 15%. This increase will also apply to the employer rates for Class 1A and Class 1B NICs.

In addition, the Class 1 NICs secondary threshold—the point at which employers begin to pay NICs—will be lowered from £9,100 to £5,000 per year, effective from 6 April 2025. This reduced threshold will remain in place until 5 April 2028. After this period, the secondary Class 1 NICs threshold will be adjusted annually in line with the Consumer Price Index (CPI).

To help support small businesses in adapting to these changes, the Employment Allowance will increase from £5,000 to £10,500. The Employment Allowance allows eligible employers to reduce their NICs liability. Currently, this allowance is available only to employers with NIC liabilities of under £100,000.

The £100,000 threshold for the Employment Allowance will also be removed, allowing all eligible small businesses to benefit from the increased rate. According to government figures, this change means that approximately 865,000 employers will pay no NICs in the coming year. These changes take effect from April 2025. An employer can claim less than the maximum if this covers their total Class 1 NICs bill.

In a significant move to enhance trust in online reviews, Google has agreed to implement substantial changes to combat fake reviews, following an investigation by the UK's Competition and Markets Authority (CMA). This initiative aims to ensure consumers can rely on genuine feedback when making purchasing decisions.

Background

The CMA launched an investigation into Google over concerns that it wasn't doing enough to detect and remove fake reviews, address suspicious behaviours, or properly sanction those involved in fraudulent review activities. Given that online reviews can significantly influence consumer spending—with estimates suggesting that up to £23 billion of UK consumer spending is potentially swayed by online reviews annually—ensuring their authenticity is crucial.

Google's Commitments

In response to the CMA's concerns, Google has committed to several key actions:

• Enhanced Detection and Removal: Google will implement rigorous steps to identify and eliminate fake reviews swiftly.
• Sanctions for Offenders:
  • Reviewers: Individuals who repeatedly post fake or misleading reviews about UK businesses will have their reviews deleted and will be banned from posting new ones, regardless of their location.
  • Businesses: Companies found to be artificially boosting their star ratings through fake reviews will have prominent 'warning' alerts added to their Google profiles. Additionally, their review function may be deactivated, preventing new reviews. Repeat offenders could see all their reviews from the past six months or more deleted.
• User Reporting: Google will establish a robust reporting system, allowing consumers to easily flag concerning reviews, including those where incentives were offered in exchange for positive feedback.

To ensure compliance, Google will report to the CMA over a three-year period. This move is part of a broader effort to promote fair practices online and protect consumers from misleading information.

The UK government offers a robust safety net for savers through the Financial Services Compensation Scheme (FSCS). This scheme is designed to protect individuals, small businesses, and charities if a bank, building society, or credit union fails, ensuring greater financial security and peace of mind.

How the Scheme Works

The FSCS guarantees deposits of up to £85,000 per person, per authorised institution. For joint accounts, the protection doubles to £170,000, as each account holder is covered individually. This means that if your bank or financial institution collapses, you will not lose your money up to this limit.

Temporary High Balances

In certain situations, the FSCS provides additional cover for temporary high balances, such as when you’ve recently sold a house, received an inheritance, or a large insurance payout. These balances are protected up to £1 million for six months, offering reassurance during significant life events.

Eligibility and Scope

The FSCS covers accounts held in UK-authorised institutions, including current accounts, savings accounts, ISAs, and certain fixed-term deposits. However, it’s essential to check that the Prudential Regulation Authority (PRA) regulates your bank. Many banks operate under the same authorisation, so splitting funds between accounts at institutions under one licence won’t increase your protection.

Beyond Deposits

While the FSCS is best known for protecting deposits, it also covers investments, insurance, and pensions under specific terms. However, these protections are subject to separate limits and conditions.

Why It Matters

The FSCS strengthens trust in the UK’s financial system, ensuring that consumers feel confident about saving and investing. For more detailed information, you can visit the FSCS website or check your bank’s coverage status directly.

The scheme stands as a cornerstone of financial stability, giving UK savers valuable protection in uncertain times.