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. However, a D1 tax code means you do not receive any personal allowance with this employment. Instead, you pay tax at the additional rate of 45% on all of your gross income. If you’re in Scotland, SD1 deducts tax on all your gross income at 41%.
Why is it allocated?
It usually means that you have another source of taxable income to which your allowance has already been allocated. For example, you may have an additional employer or receive a pension or state benefits.
A D1 tax code is allocated to anyone with expected total combined gross earnings of over £150,000 across all income sources, after any tax-free allowance has been deducted.
Is this the best tax code for me?
You only have one allowance for all of your income sources and you can choose which of them it’s allocated to. As a general rule, it should be allocated to the employer through which you earn the majority of your income. You may wish to consider asking HMRC to allocate your allowance to the umbrella company (KPPES Ltd).
If you don’t expect your earnings to exceed £150,000, you should contact HMRC to query this tax code.