Why was I given tax code 1263L
Your tax code is a string of numbers and letters that tells your employer how your pay should be taxed through the PAYE system. You get a tax code for each of your PAYE employments, so if you’ve got more than one job then the codes won’t be the same. Crucially, your tax code tells HMRC and your employer what tax-free Personal Allowance you qualify for. A good example of this is the 1263L tax code.
So what does a 1263L tax code actually mean? Well, the L at the end simply means there are no other special circumstances to consider when HMRC decides how your pay is taxed for this job. The numbers before the L refer to your tax-free Personal Allowance.
If you’ve got a 1263L tax code, the most likely reason is the day-to-day cost of doing your job. When you’re paying from your own pocket for the cost of washing your work uniform, for instance, HMRC lets you claim back some tax for your costs. One of the ways of doing this is with a ‘flat rate expense’ of £60 per year. Flat rate expenses are based on HMRC's assessment of what your yearly work costs are likely to be. They're generally a simplifier way of getting the tax relief you're owed, without the hassle of keeping precise records of your spending.
When you claim for your uniform upkeep like this, HMRC changes your tax code to 1263L. This adds £60 to your tax-free Personal Allowance.