Tax

UK Tax Codes Explained — What Your Tax Code Means

Understand your UK tax code. We explain what each letter and number means, common tax codes like 1257L, and what to do if your tax code is wrong.

· 5 min read

Your tax code tells your employer or pension provider exactly how much Income Tax to deduct from your pay. It’s a short combination of numbers and letters — yet most people never give it a second glance. That’s a problem, because a wrong tax code could mean you’re underpaying or overpaying tax by hundreds of pounds each year without realising it.

In this guide, we explain what every part of your tax code means, how to check it, and what to do if something looks wrong.

What Is a Tax Code?

A tax code is made up of numbers and letters. HMRC assigns one to every employee and pension recipient in the UK, and sends it to your employer through the PAYE (Pay As You Earn) system.

  • The number represents your tax-free allowance. Multiply it by 10 to get the amount you can earn before paying tax. For example, 1257 means a £12,570 tax-free allowance.
  • The letter tells your employer which category of allowance applies and how to calculate your tax.

Your employer uses this code every time they run payroll, so getting it right matters.

The Most Common Tax Code: 1257L

For the 2025/26 tax year, the most widely used tax code is 1257L. It applies to anyone entitled to the standard Personal Allowance of £12,570 with no adjustments.

If you have one job, no company benefits, and no other complications, 1257L is almost certainly your code.

Tax Code Letters Explained

Each letter (or combination of letters) in your tax code carries a specific meaning. Here’s the full breakdown:

Letter Meaning
L Standard Personal Allowance (£12,570)
M Marriage Allowance: receiving 10% of your partner’s allowance
N Marriage Allowance: transferring 10% of your allowance to your partner
T HMRC is reviewing items in your tax code
0T Personal Allowance fully used up, or new starter without a P45
K Deductions exceed your allowance — tax is added to your income
BR All income taxed at the basic rate of 20% (common for second jobs)
D0 All income taxed at the higher rate of 40%
D1 All income taxed at the additional rate of 45%
NT No tax deducted at all
S Scottish Income Tax rates apply
C Welsh Income Tax rates apply
W1/M1/X Emergency tax code — calculated on a non-cumulative basis

If your tax code has two letters — for example, S1257L — the first letter (S) indicates the tax regime and the second (L) indicates your allowance category.

How K Codes Work

K codes appear when your deductions exceed your Personal Allowance. This can happen if you have significant Benefits in Kind (such as a company car or private medical insurance) or if HMRC is collecting underpaid tax from a previous year.

For example, a code of K497 means HMRC is adding £4,970 to your taxable income rather than giving you an allowance. This means you pay tax on your earnings plus that additional amount.

There is a safeguard, however: you cannot pay more than 50% of your gross pay in tax as a result of a K code. If your K code would push you above that limit, your employer must cap the deduction.

Scottish Tax Codes

If you live in Scotland, your tax code starts with S (for example, S1257L). Scotland sets its own Income Tax rates and bands, which differ from the rest of the UK:

Band Rate
Starter rate (£12,571–£14,876) 19%
Basic rate (£14,877–£26,561) 20%
Intermediate rate (£26,562–£43,662) 21%
Higher rate (£43,663–£75,000) 42%
Advanced rate (£75,001–£125,140) 45%
Top rate (over £125,140) 48%

Welsh taxpayers see a C prefix (e.g., C1257L), though Welsh rates currently match England and Northern Ireland.

Where to Find Your Tax Code

You can find your current tax code in several places:

  • Your payslip — usually near the top or alongside your tax deductions
  • Your P45 — given to you when you leave a job
  • Your P60 — issued at the end of each tax year (by 31 May)
  • Your PAYE coding notice — a letter from HMRC (form P2)
  • Your Personal Tax Account — online at gov.uk

Common Reasons Your Tax Code Changes

HMRC can change your tax code at any point during the tax year. Common triggers include:

  • Starting a new job or having more than one job
  • Receiving company benefits — such as a company car, fuel benefit, or private medical insurance
  • Starting to draw a State Pension or workplace pension
  • Claiming Marriage Allowance — your code changes to include M or N
  • Underpaying tax in a previous year — HMRC collects it by adjusting your code
  • Losing your Personal Allowance — earnings above £100,000 trigger a tapered reduction

When your code changes, HMRC sends you a PAYE coding notice (P2) explaining the adjustment. Always check this carefully.

How to Check and Fix Your Tax Code

If you think your tax code is wrong, don’t wait — you could be losing money every single payday.

  1. Log in to your Personal Tax Account at gov.uk to view and update your tax code details.
  2. Call HMRC on 0300 200 3300 (Monday to Friday, 8am to 6pm).
  3. Ask your employer to check, though they cannot change your tax code themselves — only HMRC can do that.

If you’ve overpaid tax because of a wrong code, HMRC will issue a refund — typically within 5 to 6 weeks. You can reclaim overpaid tax going back up to 4 tax years, so it’s worth checking even if the error happened a while ago.