Your tax code is a short instruction that your employer or pension provider follows when working out how much Income Tax to take from each payment through PAYE. The numbers show how much tax-free pay you get; the letters explain the allowance, rate or special rule that applies. This guide decodes the common ones and explains how to check yours.
What tax codes are for
PAYE (Pay As You Earn) is the system that collects Income Tax from wages and pensions before the money reaches you. Rather than send your full financial details to every employer, HMRC boils your situation down to one short code that tells your employer or pension provider how much of your pay to leave untaxed and which Income Tax rates to apply. 1257L is the code most people have when they have one job or one pension and the standard tax-free Personal Allowance.
A tax code covers Income Tax on that job or pension only. It does not affect National Insurance, student loan repayments or other deductions on your payslip. If you have more than one job or pension, each one will have it's own tax code. A code reflects what HMRC currently knows, which may lag behind real life. A new benefit, a second income or a change in circumstances can take a while to show up. That is why HMRC can change your code partway through the year.
You can see your current code, and what HMRC thinks your income is, in the Check your Income Tax service or the HMRC app. If you want to sense-check how a code is feeding through to your pay, the salary calculator can show the take-home figure.
What the numbers mean
For most codes the number is your tax-free amount for the year, with the final digit dropped. HMRC starts with your Personal Allowance — £12,570 for most people — and then adjusts it for anything that should change how much tax-free pay you get, such as:
- income you have not paid tax on, like untaxed interest
- other taxable adjustments such as company benefits or the High Income Child Benefit Charge
The adjusted allowance then has the last digit removed and that becomes the number in the code. So the standard allowance of £12,570 gives 1257L.
The one exception is a K code, which works the other way round: there the number is extra income added to your taxable pay, not an allowance, because the deductions have used up the whole Personal Allowance and more (covered in the K tax codes section below).
A worked example. Say you get the full £12,570 allowance but your employer also gives you medical insurance worth £1,570 a year. That benefit is taxable, so HMRC takes it off your allowance: £12,570 − £1,570 = £11,000 of tax-free pay. Drop the last digit and your code becomes 1100L. The number went down because part of your allowance is now being used to cover the tax on the benefit.
What the letters mean
The letter indicates the way in which your income should be taxed. Some adjust your allowance; others tax all the income at a single rate, which is common on a second job or pension where your allowance is already used elsewhere.
| Code or marker | Tax treatment | When it is used |
|---|---|---|
| 1257L | The standard Personal Allowance is applied against your income before tax is calculated | Usually when you have one main job or pension and receive the standard Personal Allowance |
| BR | All income from that job or pension is taxed at the basic rate of 20% | Often for a second job or pension when your allowance is used elsewhere |
| D0 | All income from that job or pension is taxed at the higher rate of 40% | Often for a second job or pension when you are already a higher rate tax payer |
| D1 | All income from that job or pension is taxed at the additional rate of 45% | Often for a second job or pension when you are already an additional rate tax payer |
| 0T | No Personal Allowance is given on that income | When you are not entitled to the personal allowance e.g. if your income is over £125,140 |
| K | The number gets added to your pay before tax is calculated, rather than deducted | When taxable benefits, State Pension or tax owed exceed your allowance |
| W1 / M1 / X / NONCUM | An emergency, non-cumulative basis | Usually as a temporary basis after a new job or changed circumstances |
A few more letters turn up regularly. L is the standard allowance. M and N relate to Marriage Allowance: M means you have received 10% of your partner's allowance, N means you have given 10% of yours away. T flags that your code involves other calculations HMRC keeps under review. NT means no tax is being taken from that income at all.
Second jobs and pensions. BR and 0T often appear when you have more than one job or pension. Your Personal Allowance can only be given against one source at a time. If it is already set against your main job, a second job is typically taxed in full at the basic rate (BR) — or at 0T if your employer does not yet have enough detail to know which rate to use.
Scotland and Wales. A code starting with S means Scottish Income Tax rates apply; one starting with C means Welsh rates. Scotland has more tax bands than the rest of the UK, so you may see codes such as SBR, SD0, SD1, SD2 or SD3, each pointing at a different Scottish rate. The codes work the same way just with a different set of rates.
Emergency tax codes
You are on an emergency code if yours ends in W1 (paid weekly), M1 (paid monthly), X (pay dates vary) or NONCUM, which some payroll software shows instead.
Normally, PAYE is cumulative: it looks at your total pay and tax across the whole year to date, so things even out over time. An emergency code switches that off. It works out tax on that pay period alone, as if you earned the same amount every week or month. Because it ignores what came before, it can take too much or too little tax.
For a new starter, this is usually a stopgap while HMRC catches up. When you are first paid, your employer tells HMRC you have started a new job. If they do not have your previous pay and tax details, you go onto an emergency code. Handing over the P45 from your last job (or completing a starter checklist if you do not have one) gives them the information they need. HMRC then issues an updated code to you and your employer, which can take up to 35 days from when you start. If you have overpaid in the meantime, that gets resolved once the correct code has been applied.
K tax codes
A K code works the opposite way an L code does. It is used when the things HMRC needs to tax — untaxed income or deductions — add up to more than your Personal Allowance. That can happen when you are paying off tax owed from an earlier year through your wages, receive the State Pension or taxable state benefits, have company benefits like a company car, or earn more savings interest than your Personal Savings Allowance.
Instead of subtracting an allowance, the K number is added to your taxable pay for that period. So K475 adds £4,750 to the income your employer taxes. There is a safeguard, though: when a K code is in use, your employer or pension provider cannot take more than half of your pre-tax pay or pension in that period. Anything beyond that limit is carried forward rather than taken all at once.
Why your tax code might change
Codes change with your circumstances. Common triggers include:
- starting a new job, especially if a P45 is late or missing
- starting to receive a company benefit, the State Pension or other taxable state benefits
- taking on a second job or a pension alongside work
- claiming or cancelling Marriage Allowance
- untaxed savings interest above your Personal Savings Allowance
- the High Income Child Benefit Charge applying to you
- tax left underpaid from an earlier year being collected through this year's code
When HMRC changes a code, they usually write to explain how they worked it out.
What to do if your tax code looks wrong
Start by checking what information HMRC currently uses to set the code, then update them if any of that information is incorrect or no longer applies. HMRC recalculates the code once the underlying details are right.
- 1Open Check your Income Tax (or the HMRC app) and look at your code, your Personal Allowance and the income figures HMRC is using.
- 2Update anything out of date — a job or pension that has ended, a benefit you no longer get, or income that has changed.
- 3Give a new employer your P45, or complete a starter checklist if you do not have one, so an emergency code can be lifted.
- 4If you cannot use the online service, contact HMRC directly to get your details put right.
Your employer almost always applies the code HMRC sends; they do not choose it, so any amendment is usually dealt with between you and HMRC.
If you've paid too much or too little tax
The effects of a wrong code are usually corrected once HMRC has your full income details, either during the year by issuing a new code or after the year end with a full year tax computation.
If you have overpaid, HMRC works out the difference once they have your details and asks your employer or pension provider to refund it through your pay, normally when the new code is first applied. If they do not yet have the required details, the refund waits until they do, which is one more reason to pass on a P45 promptly. After the tax year ends, HMRC reviews what you paid and writes to you (with a P800 or Simple Assessment letter) if the amount was not right, telling you how any refund will reach you.
If you have underpaid, HMRC estimates what is owed and usually adjusts your code to collect it gradually, over one or more tax years where possible, rather than in a single hit. They confirm the position after year-end in the same kind of letter.