Guide
Tax codes explained
Your tax code decides how much of your pay is tax-free, and a wrong one can quietly cost you hundreds of pounds a year. This guide decodes the numbers and letters, explains why emergency codes overtax you, and gives you the steps to get a bad code corrected.
What the number means
The number is your annual tax-free allowance with the final digit removed. The standard personal allowance for 2026/27 is £12,570, which becomes 1257. Your employer divides that across the pay periods in the year: £1,047.50 a month, or £241.73 a week. Everything above that is taxed at your marginal band rate.
A code below 1257 means something has been deducted from your allowance - a taxable benefit, untaxed savings income, tax underpaid in a previous year, or an allowance given to your partner. A code above 1257 means something has been added, such as job expenses or professional subscriptions you have claimed.
What the letters mean
| Code | Meaning |
|---|---|
| L | You get the standard tax-free personal allowance. |
| M | You have received 10% of your partner's allowance through Marriage Allowance. |
| N | You have given 10% of your allowance to your partner through Marriage Allowance. |
| T | Your code includes other calculations, often the personal allowance taper. |
| 0T | No allowance at all, usually a new job with no P45 or an allowance fully used up. |
| BR | Everything from this job is taxed at basic rate, typically a second job. |
| D0 | Everything from this job is taxed at higher rate. |
| D1 | Everything from this job is taxed at additional rate. |
| NT | No tax is taken from this income at all. |
| K | Deductions exceed allowances, so an amount is added to your taxable pay. |
| S prefix | Scottish rates apply, for example S1257L. |
| C prefix | Welsh rates apply, for example C1257L. |
Definitions follow gov.uk guidance on tax codes.
Emergency codes and why they cost you
An emergency code looks like 1257L W1, 1257L M1 or 1257L X. The suffix tells payroll to work out tax on that pay period alone rather than cumulatively. Normally PAYE looks at your income and allowance for the whole year to date, so unused allowance from earlier months reduces this month's tax. A W1 or M1 code throws that away.
The effect is worst when you start a job partway through the tax year. Suppose you start in September on £36,000 and are put on 1257L M1. Each month payroll gives you one month of allowance and taxes the rest, ignoring the five months of unused allowance sitting behind you - roughly £5,237 that should have been tax-free. On a cumulative code, that unused allowance would have wiped out most of your tax for the first month or two. On an emergency code you pay it now and reclaim it later.
HMRC states the code is usually corrected within about 35 days once it has details from your old and new employers. The single most effective thing you can do is hand your new employer a P45 from your previous job. If you do not have one, complete a starter checklist accurately - the answers you tick decide whether you get a cumulative code, an emergency code or a BR code.
K codes explained
A K code is the mirror image of a normal code. Instead of subtracting tax-free pay, it adds a notional amount to your taxable pay. K475, for example, adds £4,750 to your annual taxable income, or £395.83 a month.
You end up on one when deductions exceed allowances. Common causes are a company car with high emissions, private medical insurance provided by your employer, tax owed from a previous year being collected through your code, or a state pension being paid alongside employment. There is a legal protection: the extra tax collected through a K code cannot exceed 50% of your pre-tax pay in any pay period. If it would, the excess rolls forward.
Second jobs, BR and D0
You get one personal allowance across all your jobs, so it is normally applied to your main employment and the second job gets BR, D0 or D1. BR taxes everything at 20%, D0 at 40% and D1 at 45%. This works well when your main job already uses the whole allowance. It goes wrong when your main job pays less than £12,570, because part of your allowance sits unused while the second job is taxed at 20% from the first pound.
The fix is to ask HMRC to split your allowance between the two employments, or to reassign it to whichever job pays more. You can do this in your personal tax account without waiting for the end of the year.
Scotland, Wales and the S and C prefixes
An S prefix applies Scottish income tax rates and a C prefix applies Welsh rates. Welsh rates are currently set at the same levels as England and Northern Ireland, so a C code produces the same tax. An S code does not: Scotland has six bands rather than three, and higher earners pay noticeably more. If you have moved across the border and your code has not changed, your tax is wrong. See Scottish income tax vs the rest of the UK for what the difference is worth.
How to check and fix a wrong code
- Find the code on your payslip, your P45, your P60 or the PAYE coding notice HMRC posts to you.
- Sign in to your personal tax account and check the breakdown. It shows every deduction and addition HMRC has applied and lets you correct wrong estimates directly.
- Look for the usual culprits: a company benefit you no longer receive, a second job that has ended, an estimated untaxed income figure that is far too high, or a Marriage Allowance transfer you did not intend.
- Update the details online. HMRC issues a revised code to your employer, and a cumulative code will refund the overpaid tax through your next payslip automatically.
- For a previous tax year, check your P800 calculation. Claims for earlier years are generally allowed for up to four years after the end of the tax year concerned - see claiming a tax refund on gov.uk.
Check your numbers
The take-home pay calculator shows what your monthly tax should be on a standard code, so you can compare it with your payslip in under a minute. If the two do not agree, the full audit in how to check you are paying the right tax will usually find the cause.
Common questions
What does tax code 1257L mean?
1257L is the standard code for someone with the full personal allowance and one job. The 1257 is your tax-free allowance of £12,570 with the last digit removed, and L means you get the standard personal allowance. Your employer spreads that allowance across the year, giving you £1,047.50 of tax-free pay each month.
How do I know if I am on an emergency tax code?
Look for W1, M1 or X after the code on your payslip, or the word NONCUM. An emergency code taxes each pay period in isolation instead of cumulatively, so it ignores any allowance you have not used earlier in the year. That usually means you pay too much tax until HMRC issues a proper code.
Why is my tax code a K code?
A K code means the deductions in your code exceed your allowances, usually because of taxable benefits like a company car or medical insurance, untaxed income, or tax owed from a previous year. Instead of giving you tax-free pay, a K code adds a notional amount to your taxable pay. By law your employer cannot take more than half of your pre-tax pay in a period through a K code.
How long does HMRC take to correct a tax code?
HMRC says an emergency code is usually updated within about 35 days once it has details from your old and new employers. Giving your new employer a P45 speeds this up. If nothing has changed after 35 days, contact HMRC directly or update your details in your personal tax account.
Written for the 2026/27 tax year as general information, not personal tax advice. Only HMRC can change your tax code, and only your own coding notice shows the exact figures behind it.