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 includes 1060L, it means your allowance is £10,600.
It is given to you in equal portions throughout the year according to your payment frequency. 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)
Having W1 or M1 attached to your code means it is a non-cumulative tax code. The tax due on each payment is therefore determined without taking into account any tax you’ve already paid this year, or how much of your tax-free personal allowance has been used. In other words, it can result your overpaying tax. If you see either of these codes on your payslip, you might want to double check if this is the best tax code for you.