New Tax Code 2021 (March) Everything You Need To Know!

New Tax Code 2021

New Tax Code 2021 (March) Everything You Need To Know! >> The write-up is about the 2021/22 tax codes that all taxpayers need to follow to pay off their taxes.

The tax year for 2020/21 is soon ending, and tax-payers are preparing to pay off their tax according to the New Tax Code 2021. Many employees and pensioners are looking forward to taking advantage of the new allowances as per the tax codes.

Some changes are made in the new tax codes 2021/22, and taxpayers have to pay their taxes accordingly. The tax codes are used by pensioners and employees in the United Kingdom and those working in India and the United States to pay off their taxes.   

HM Revenue and Customers set the tax codes, and all taxpayers have to pay off the taxes according to the new tax codes

Table of Contents

What is the New Tax Code 2021?

It has been already announced the final tax codes for the Pay-As-You-Earn or PAYE taxpayers in the budget of 2021/22. The HMRC has released the list of new tax codes for 2021/22. 

  • The fundamental tax code for the fiscal year 2021/22 is 1257L for the employees, and it gives them a personal allowance of 12,570 GBP for the tax year. There is an increase of 70 GBP. 
  • Employees earning more than 125,140 GBP would receive no allowance benefits and be on the 0T tax code. 
  • Employees with earnings between 100,000 and 125,140 GBP would get a personal allowance. But it is reduced by 1 GBP for every two pounds above 100,000 pounds. 
  • Employees applying for the wedding allowance due to a low-earning spouse would have a New Tax Code 2021 with the suffix of M, and employees surrendering the allowance need to suffix N. 

What Tax Code to Use for Tax Year-End 2021/22?

The starter or casual workers need to complete the Starter checklist; otherwise, they have to use the new tax code 1257L until they get notification from HMRC.

  • HMRC would notify the employees for different tax code 
  • The employee code won’t be the basic code used for the last tax year

So, it is suggested that employees check the HMRC website to learn about the new tax code that employees have to use. Until notified, the default tax code would 1257L, and it must be suffixed with M1 or X for monthly pay and W1 for weekly pay. 

What is the New Tax Code for Pensioners?

Pensioners are not qualified for any age allowance as per New Tax Code 2021. However, married pensioners above the age of 83 would receive a married couple allowance when they suffix 891 to the new tax code for pensioners. 

When Would the New Tax Year Start?

HMRC has already started sending the taxpayers the notification letters and informing them about the new personal allowance. It is the amount that an employee earns as the taxable income before paying off their income tax. 

The new tax year would start from 6th April 2021, and it is expected that the personal allowance would increase. Presently, the standard allowance is 125,500 GBP, and the threshold would also increase by 0.5% in April 2021. 


Since the New Tax Code 2021 is released, taxpayers have started getting notifications from HMRC for the possible allowance. 

It is requested that all taxpayers must visit the website of HMRC for more details regarding the personal allowances and tax codes. 

Do you have anything to share regarding the new tax code? Please share it in the comment section.

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