1060L was the most common tax code in the UK for the 2015/16 tax year, which lasted from 6th April 2015 – 5th April 2016. You usually get a new tax code at the beginning of a tax year because this is often when changes to your personal allowance come into effect.
What does it mean?
Nearly everyone is entitled to a tax-free personal allowance, which means that a certain amount of your earnings each year are paid to you without being taxed. If your tax code is 1060L, it means your allowance is £10,600.
It is given to you in equal portions throughout the year according to your payment frequency, so that by the end of the tax year you have received your full allowance.
For example: if you are paid weekly, your allowance is equivalent to £204 per week.
Any earnings over and above your personal allowance will be taxed as follows:
- 20% on earnings up to £31,785
- 40% on earnings between £31,786 and £150,000
- 45% on earnings above £150,000
(these figures were correct in the 2015/16 tax year)
1060L is a cumulative tax code, which means that if you return to work after a break or if you start working part-way through the tax year, your tax-free personal allowance will have been building up and you may pay less tax for a while.
In the 2014/15 tax year, the most common tax code was 1000L, which gave you a personal allowance of £10,000.