Your tax code tells your employer or pension provider how much of your income to treat as tax-free before they deduct Income Tax. It is made up of numbers and a letter, and it appears on your payslip.
How to read it
The most common code is 1257L. The number is your tax-free amount divided by 10, so 1257 stands for a Personal Allowance of £12,570. The letter gives extra detail about your situation.
- L means you get the standard Personal Allowance.
- BR means all of that income is taxed at the basic rate, with no allowance applied. This is common on a second job or pension.
- 0T means no allowance is given, so all income is taxed from the first pound.
- K means you have untaxed income or benefits that are larger than your allowance, so extra tax is collected.
- W1, M1 or X at the end of a code means an emergency code, which treats each payment on its own.
Why your code can change
HMRC can change your code when you start a new job, when you receive a taxable benefit such as a company car, when you have underpaid tax in a previous year, or when your income changes in a way they know about. It can also change when your income is high enough to reduce your allowance.
How to check it
You can see your tax code in your HMRC personal tax account or the HMRC app, and on your payslip. Compare it with what you expect. If the numbers do not match your situation, it is worth asking why.
If it looks wrong
Tell HMRC, or ask us to do it for you. If you have paid too much tax, you may get a refund. If you have paid too little, HMRC may collect the difference through your code in future months. Either way, it is better to find out early.
This guide is general information, not personal advice. Rules and rates can change, so check GOV.UK or ask us about your own situation.
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