What is a Tax Code?
Your tax code tells your employer how much tax-free income you're entitled to. It's used every pay day to calculate how much Income Tax to deduct from your wages through PAYE (Pay As You Earn).
The most common tax code is 1257L — this means you get £12,570 tax-free (your Personal Allowance). HMRC drops the last digit and adds a letter.
Common Tax Codes
Number + Letter Codes
- 1257L — Standard Personal Allowance of £12,570. Most employees have this.
- 1282L — Includes Marriage Allowance (£12,570 + £1,260 transferred from partner = adjusted).
- BR — All income taxed at Basic Rate (20%). Common for second jobs.
- D0 — All income taxed at Higher Rate (40%). Second job where combined income exceeds £50,270.
- D1 — All income taxed at Additional Rate (45%). Second job where combined income exceeds £125,140.
- NT — No Tax. Very rare, used in specific circumstances.
- 0T — No Personal Allowance. Used when HMRC doesn't have enough information, or your allowance has been used up.
The K Code
A K code means you owe more tax than your allowance covers — for example, because of taxable benefits like a company car. HMRC adds the extra amount to your tax calculation rather than giving you a deduction.
⚠️ If you have a K code and don't understand why, contact HMRC immediately. It may mean you're being taxed for benefits you don't actually receive.
Emergency Tax Codes
When you start a new job without giving your employer a P45, you may be put on an emergency tax code. These include:
- 1257L W1 or 1257L M1 — "Week 1" or "Month 1" basis. Your tax is calculated only on that period's earnings, not cumulatively. You may overpay or underpay.
- 1257L X — Same as W1/M1 in some systems.
💡 Emergency tax usually resolves itself once HMRC processes your P45. If it hasn't after 2-3 months, call HMRC on 0300 200 3300.
Scottish Tax Codes
If you live in Scotland, your code starts with S (e.g. S1257L). This tells your employer to apply Scottish Income Tax rates, which differ from the rest of the UK — Scotland has 6 bands including the Starter (19%), Intermediate (21%), and Top (50%) rates.
Welsh Tax Codes
Welsh residents get a C prefix (e.g. C1257L). Currently Welsh rates mirror England/NI, but the Welsh Parliament has the power to vary them in future.
How to Check Your Tax Code
- Payslip — Your tax code is printed on every payslip
- P60 — Your end-of-year tax certificate shows the code used
- HMRC Personal Tax Account — Log in at gov.uk/personal-tax-account
- HMRC App — Download the free HMRC app for quick access
What to Do If Your Code is Wrong
Wrong tax codes are surprisingly common. If you think yours is incorrect:
- Check your Personal Tax Account online to see what HMRC thinks your income and benefits are
- Contact HMRC on 0300 200 3300 (Income Tax helpline)
- If you've overpaid, HMRC will issue a refund — either through your pay or as a cheque/bank transfer
- If you've underpaid, HMRC may adjust your code for the next year to collect the difference gradually
🔴 Tax code changes for the new tax year (starting 6 April) are usually sent out in January/February. Check yours arrives and is correct.
Multiple Jobs
If you have more than one job, only ONE employer gets your Personal Allowance. Your other jobs will typically use BR, D0, or D1 codes depending on your total income. You should give your Personal Allowance to your highest-paying job for the most efficient tax treatment.