How UK tax codes work
A UK tax code tells your employer or pension provider how much income tax to deduct from your pay. HMRC issues a code based on your personal allowance, any taxable benefits (like a company car), other income you've reported, and any tax you owe or are owed from previous years.
Every code has two parts: a number and a letter (or letters). Some codes also have a prefix.
The number is your tax-free allowance divided by 10. So 1257 means £12,570 tax-free. The letter modifies how the allowance is applied. A prefix indicates which UK nation's tax rates apply.
You can see your current code on your payslip, your P60, or by logging into your personal tax account at gov.uk.
The 1257L code (the standard one)
Most UK employees have tax code 1257L. It applies when:
- You have one job or pension
- You're entitled to the full standard personal allowance (£12,570 in 2025-26)
- You don't have significant taxable benefits
- You don't owe HMRC any tax from previous years
With 1257L, you pay no income tax on the first £12,570 you earn, 20% on the next £37,700 (up to £50,270), 40% on income above that up to £125,140, and 45% above £125,140.
Your personal allowance is spread evenly across the year. If you're paid monthly, you get £1,047.50 (£12,570 ÷ 12) tax-free each month.
Common tax code letters
| Letter | Meaning | Typical situation |
|---|---|---|
| L | Standard personal allowance | One job or pension, normal personal allowance |
| M | Receives Marriage Allowance | Spouse has transferred 10% of their allowance to you |
| N | Transferred Marriage Allowance to spouse | You've given up 10% of your allowance to a basic-rate partner |
| T | Other calculations apply | Income over £100k (allowance tapering), or specific HMRC adjustments |
| 0T | No personal allowance | All income taxed from £0. Used when allowance is unknown or used up |
| BR | All income at basic rate (20%) | Second job, second pension |
| D0 | All income at higher rate (40%) | Higher earners with multiple income sources |
| D1 | All income at additional rate (45%) | Additional-rate earners with multiple sources |
| NT | No tax | Income outside UK tax, certain Crown servants overseas |
| K (prefix) | Negative allowance, deductions exceed allowance | Large taxable benefits, untaxed income, prior-year debt |
K codes in detail
K is the only code where the number comes after the letter rather than before, because the number represents extra income added to your taxable pay, not allowance. HMRC issues K codes when your deductions and adjustments exceed your personal allowance.
Example. Your code is K475. The K475 means HMRC will add £4,750 to your taxable income (£475 × 10) each tax year. If you earn £30,000 from your job, you're taxed as if you earn £34,750.
Common reasons for a K code:
- You owe HMRC tax from a previous year (collected via PAYE rather than a one-off bill)
- You have a large company benefit (typically a company car with high CO2)
- You receive untaxed state pension on top of a private pension or PAYE job
HMRC won't deduct more than 50% of your gross pay in any pay period due to a K code, even if the maths would suggest more. The remainder rolls into next pay period.
Emergency tax codes
Emergency codes look like 1257L W1, 1257L M1, or 1257L X. The suffix means:
- W1 = Week 1 basis. Each pay period taxed in isolation
- M1 = Month 1 basis. Same idea, monthly
- X = Non-cumulative, used when pay frequency is irregular
Emergency codes appear when HMRC doesn't have your full income history yet. Most common after starting a new job before HMRC has received your previous employer's P45 details.
Emergency codes can lead to under-tax or over-tax in the short term. HMRC sorts this automatically when they have full data, usually within 1-2 pay cycles. You don't need to do anything; if you've overpaid, the refund comes through your next payslip.
Scottish (S) and Welsh (C) tax codes
If you live in Scotland, your tax code starts with S (e.g. S1257L). You pay Scottish rates of income tax:
| Band | 2025-26 rate | Income band |
|---|---|---|
| Personal allowance | 0% | Up to £12,570 |
| Starter | 19% | £12,571 – £14,876 |
| Basic | 20% | £14,877 – £26,561 |
| Intermediate | 21% | £26,562 – £43,662 |
| Higher | 42% | £43,663 – £75,000 |
| Advanced | 45% | £75,001 – £125,140 |
| Top | 48% | Over £125,140 |
If you live in Wales, your code starts with C. Welsh income tax is devolved but the rates currently match England and Northern Ireland (basic 20%, higher 40%, additional 45%). The prefix exists in case the Welsh government changes rates in future.
England and Northern Ireland residents have no prefix and pay the standard UK rates.
How to check if your tax code is right
Sign into your personal tax account at gov.uk. You'll see:
- Your current tax code for each job and pension
- How HMRC calculated it (which allowances, benefits, adjustments applied)
- Estimated take-home pay for the year
Compare what HMRC shows against your real situation. Things that often go wrong:
- An old benefit (company car you no longer have, gym membership that ended) still being deducted
- An expired Marriage Allowance still showing as transferred
- A second job or pension HMRC doesn't know about
- Your full personal allowance not applied because HMRC thinks you have multiple incomes
How to fix a wrong tax code
Through your personal tax account, click "Check your income tax for the current year" then "Update your income for this year" or "Change your benefits". Submit the corrected details. HMRC will:
- Recalculate your tax code within 1-2 working days
- Send you and your employer a new code notice
- Refund any overpaid tax through your next payslip (or via cheque if you've already left the job)
- Spread any underpayment across the remaining months of the tax year
If you've been on a wrong code for years, HMRC will refund up to 4 previous tax years. For older underpayments, you may be able to claim an Extra-Statutory Concession A19 if HMRC delayed using information they had.
If your employer applies a tax code that doesn't match what HMRC issued, that's a payroll error, not an HMRC one. Speak to your payroll team and ask them to apply the code on your P6 or P9 notice.
Tax codes for company directors
Company directors who take a small salary plus dividends often have an unusual code. If the salary is below the personal allowance (typically £12,570 or whatever fits your NI plan), HMRC may apply 1257L on the salary and tax the dividends separately via Self Assessment.
If you receive non-cash benefits (private medical insurance, company car), these reduce your personal allowance via the tax code. Each year you'll receive a P11D from your company; the values feed into your tax code for the following year.