Your tax code is one of the most important numbers on your payslip — and one of the least understood. It tells your employer how much income tax to deduct each pay period. Get it wrong (or let HMRC get it wrong) and you can overpay or underpay tax by hundreds of pounds without realising until April.
This guide explains every major UK tax code, how HMRC sets them, and exactly what to do if something looks off.
A tax code is a short alphanumeric reference that your employer uses to calculate how much income tax to deduct from your pay via PAYE (Pay As You Earn). HMRC issues tax codes to employers electronically through the Real Time Information (RTI) system. Your employer cannot choose or change your tax code — they must apply whatever code HMRC instructs.
You can find your tax code in several places:
Most UK tax codes have two parts: a number and a letter. The number represents your tax-free allowance for the year — simply multiply it by 10 to get the annual amount. The letter indicates how HMRC is adjusting that allowance.
Tax code 1257L means: personal allowance = 1257 × 10 = £12,570. Your employer applies this allowance evenly across the year (or each pay period on a cumulative basis), deducting 20% tax only on income above it.
For 2026/27, the standard personal allowance is £12,570, giving the standard code of 1257L for most employees.
| Code | What it means | Who typically gets it |
|---|---|---|
| 1257L | Standard personal allowance of £12,570. Income above this taxed at 20%, 40% or 45%. | Most employees with one job and no adjustments |
| BR | All income taxed at Basic Rate (20%) — no personal allowance applied. | Second job, second pension, or temporary fix while HMRC processes paperwork |
| D0 | All income taxed at Higher Rate (40%) — no personal allowance. | Second income source where basic rate band is already used up on primary job |
| D1 | All income taxed at Additional Rate (45%) — no personal allowance. | Very high earners with multiple income sources above £125,140 |
| NT | No tax deducted. | Non-UK residents, certain pension drawdown arrangements |
| K[number] | Negative allowance — income is increased (not decreased) by the amount before tax is applied. | High taxable benefits in kind (company car, fuel), underpaid tax from prior years |
| 0T | No personal allowance; income taxed at appropriate rate across the bands. | New employee with no P45, personal allowance fully withdrawn (income over £125,140) |
| S prefix | Scottish income tax rates apply (e.g. S1257L). | Scottish residents |
| C prefix | Welsh income tax rates apply (e.g. C1257L). | Welsh (Cymru) residents |
| L | Letter — you receive the standard personal allowance. | Standard employees |
| M | Letter — you receive Marriage Allowance transferred from partner (increased allowance). | Recipient of Marriage Allowance transfer |
| N | Letter — you have transferred part of your allowance to your partner. | Transferor of Marriage Allowance |
| T | Letter — your allowance is subject to a review by HMRC. | Complex tax affairs; allowance needs checking each year |
When HMRC doesn't have enough information about your employment — most commonly when you start a new job without a P45, or when you receive your first pension payment — it issues an emergency tax code.
Emergency codes come in three forms:
The critical difference from a normal code is what "non-cumulative" means. Under a standard cumulative code, your employer looks at your total earnings for the year so far and ensures you've received your allowance proportionately. Under an emergency W1 or M1 code, each pay period is treated as if it's week 1 or month 1 of the tax year, in complete isolation.
If you start a new job in January and are placed on M1, you only receive 1/12 of your personal allowance (£1,047) against that month's income — not the full year's allowance. You may overpay tax every month until HMRC issues a proper code and applies a cumulative correction, which can take weeks. The refund comes eventually (via payroll or P800), but it can take until after April 5th.
The fastest fix is to provide your new employer with your P45 from your previous job. If you don't have one (e.g. you were self-employed, or it's your first job), complete form P46 or, preferably, log in to your HMRC Personal Tax Account and notify HMRC directly. HMRC should then issue your employer with an updated code within days.
You can only use your personal allowance once. If you have two jobs or a job plus a pension in payment, HMRC typically assigns your full 1257L code to your primary income source and a BR or D0 code to the secondary source.
How HMRC decides which is "primary" depends on the information you provide. If your second job is genuinely small (a few hours' consultancy), it usually makes sense to keep the allowance on your main job. If your situation is more complex — for example, you earn more from your second income — contact HMRC to split the allowance across both sources in proportion to your income.
A common misunderstanding: having two jobs doesn't give you two personal allowances. You have one allowance of £12,570 for the full tax year, regardless of how many income sources you have. The code BR on your second job exists to prevent you from accidentally getting the allowance twice.
Marriage Allowance allows a lower-earning spouse or civil partner to transfer £1,260 of their personal allowance to the higher earner, provided the transferor earns below £12,570 and the recipient is a basic-rate taxpayer (income between £12,570 and £50,270).
The codes this creates for 2026/27:
The saving is worth up to £252 per year in reduced tax for the recipient. It must be claimed via gov.uk — your employer cannot apply it without HMRC instruction.
Tax code errors are surprisingly common. HMRC relies on information from employers, pension providers and your own self-assessment — and discrepancies arise when jobs change, benefits in kind are incorrectly reported, or prior-year tax issues haven't been resolved.
Signs your code might be wrong:
How to correct it:
If HMRC corrects your code mid-year, the correction is applied cumulatively — meaning your next payroll run will adjust for any over- or under-payment since April 6th. You won't need to wait until the end of the tax year to be refunded overpaid tax in most cases.
Marcus has one job earning £35,000. His tax code is 1257L, meaning £12,570 is tax-free. Taxable income = £35,000 − £12,570 = £22,430. Tax = 20% × £22,430 = £4,486 per year, or £373.83/month.
Each month on a cumulative code, his employer applies 1/12 of the allowance (£1,047.50) against that month's gross salary.
Priya starts a new job in November at £42,000/year (£3,500/month). She has no P45 and is placed on 1257L M1.
In November: HMRC treats this as month 1. She gets 1/12 personal allowance = £1,047.50 against her £3,500 salary. Taxable = £2,452.50. Tax = £490.50.
Correct position: she should only pay tax on income above (1/12 × £12,570) = £1,047.50 per month. The M1 code already gives her this, so in her case the result is the same. BUT if she earned more in prior months this year, the cumulative effect is lost — any overpayment from her old job won't offset this month's tax.
By January, HMRC updates her code to 1257L cumulative. Her employer looks at November + December + January earnings cumulatively, and she gets a refund of any excess through reduced January tax.
David earns £40,000 and has a company car with a benefit-in-kind (BiK) value of £8,000. His personal allowance is £12,570, but the £8,000 BiK reduces it to £4,570. His tax code: 457L.
If his BiK were £15,000 — exceeding his allowance — HMRC calculates the negative allowance: £15,000 − £12,570 = £2,430. Tax code: K243 (meaning £2,430 extra added to his taxable income). His effective taxable income becomes £40,000 + £2,430 = £42,430.
Model your exact take-home pay with your current salary, tax code and deductions.