If your tax code has unexpectedly changed from 1250L to 1185L, you may be confused especially because both codes relate to older tax years. So why is HMRC using these numbers now?
The short answer:
- HMRC has reduced your Personal Allowance because they believe you owe tax or receive taxable benefits.
- To do this, they often use older tax codes (like 1185L) to adjust your allowance.
This guide explains exactly why it happens, what it means, and what you should do next.
Understanding What the Codes Mean
What is the 1250L tax code?
- Used in 2019/20
- Represents a £12,500 Personal Allowance
What is the 1185L tax code?
- Used in 2018/19
- Represents an £11,850 Personal Allowance
So if HMRC changes your code from 1250L – 1185L today, it does not mean your allowance has gone back to those years.
Instead, HMRC is reducing your allowance by £650, but using the older code format to show this.
Why HMRC Reduces Your Tax Code (Main Reasons)
Here are the most common reasons your allowance drops by £650, making your tax code fall to 1185L.
1. HMRC Is Collecting Underpaid Tax From Previous Years
The most common reason.
If you owe tax, HMRC collects it by reducing your personal allowance.
Example: You owe £650 from last year.
HMRC reduces your allowance from £12,500 – £11,850 (a £650 reduction).
Your tax code becomes 1185L.
This lets HMRC collect the tax gradually through your salary.
2. You Now Receive Taxable Benefits in Kind
Your employer may provide benefits such as:
- Company car
- Fuel benefit
- Private medical insurance
- Gym membership
- Accommodation
- Staff loans
These are taxable.
If HMRC receives a P11D from your employer, they reduce your allowance to tax these benefits – lowering your code.
3. You Have Untaxed Income HMRC Wants to Collect Through PAYE
If HMRC believes you receive income not taxed at source, they reduce your code.
This includes:
- Side hustle income
- Rental income
- Freelancing income
- Dividends
- Pension income
- Investment income
Instead of waiting for your Self Assessment, HMRC adjusts your tax code now.
4. You Previously Received an Allowance That No Longer Applies
HMRC may remove allowances such as:
- Marriage Allowance
- Uniform allowance
- Work-from-home allowance
- Job expenses allowance
When removed, your tax-free amount decreases – tax code reduces.
5. Payroll Updates or Changes in Employment
Your employer submits real-time information (RTI) to HMRC.
If HMRC thinks your:
- Bonuses have increased
- Overtime has changed
- Pay is different
- Employer details changed
It triggers a tax code update.
Sometimes this is correct sometimes it isn’t.
6. HMRC Identified an Error in Your Previous Tax Code
If HMRC applied the wrong allowances in an earlier year, they will:
- Correct it,
- Adjust your current-year allowance,
- Give you a new code (e.g., 1185L).
These adjustments are called coding notices.
Is The Tax Code Change Always Correct?
No.
Many people end up with the wrong tax code because:
- Employers submit incorrect data
- HMRC assumes your income too high/low
- Benefits are wrongly reported
- Past allowances were removed accidentally
- Duplicate job records appear in HMRC system
You may end up overpaying tax unless corrected.
Example Breakdown: How HMRC Gets 1185L From 1250L
Your original allowance: £12,500 – Code 1250L
HMRC reduces your allowance by: £650
New allowance: £12,500 − £650 = £11,850 – Code 1185L
This is why HMRC uses older codes they represent your adjusted allowance.
What To Do If Your Tax Code Looks Wrong
Step 1 Log in to your HMRC Personal Tax Account
Check what HMRC thinks:
- Your income is
- Your benefits are
- Your deductions are
Step 2 Look for incorrect items
Wrong entries include:
- A company car you no longer have
- A second job you never had
- Benefits you never received
- Incorrect pay figures
- Missed allowances (like Marriage Allowance)
Step 3 Update the information
You can fix it yourself online.
Step 4 Call HMRC if needed
HMRC helpline: 0300 200 3300
Frequently Asked Questions
1. Why has my tax code suddenly dropped?
Because HMRC believes your tax-free allowance should be reduced due to taxable benefits, underpayments, or untaxed income.
2. Why has my tax code changed from 1250L to 1185L?
Your tax code dropped because HMRC has reduced your Personal Allowance by £650. This usually happens due to underpaid tax, taxable benefits (like a company car or medical insurance), or untaxed income such as rental income or freelance work. HMRC uses older-style codes like 1185L to show the reduced allowance.
3. Why did my UK tax code change?
Your tax code can change for several reasons, including:
- Employer updates sent to HMRC (RTI)
- New benefits in kind
- Removal of allowances
- Underpayment of tax
- Starting or stopping a second job
- Estimated income changes
- HMRC correcting previous errors
Any change to your expected tax-free allowance results in a new tax code.
4. How do I change my tax code back to normal?
To correct or restore your tax code:
- Log in to your HMRC Personal Tax Account
- Go to “Check your Income Tax”
- View what HMRC is using to calculate your code
- Report anything incorrect (old jobs, wrong income, wrong benefits)
- HMRC immediately issues a corrected tax code to your employer
If the issue is complex, call HMRC at 0300 200 3300.
5. How to avoid the 60% tax trap in the UK?
You can avoid the 60% tax trap by reducing your adjusted net income below £100,000 through:
- Pension contributions (best method)
- Gift Aid donations
- Salary sacrifice (e.g., electric car, cycle-to-work, extra pension)
- Claiming allowable expenses
These methods help restore your Personal Allowance and reduce your effective tax rate.
Final Thoughts
A tax code change from 1250L to 1185L means HMRC has reduced your Personal Allowance usually to collect unpaid tax or reflect new taxable benefits.
It is not related to current tax year allowances.
It simply shows how much tax-free income HMRC believes you should receive after adjustments.
Always understanding your tax code to avoid overpaying or underpaying tax. From checking the correct tax code to handling underpayments or HMRC errors, speak to a tax expert today and get your tax code sorted quickly and correctly.