If you work in the UK, you’ve probably noticed a tax code on your payslip a combination of numbers and letters that might look confusing at first. But your tax code plays an important role. It tells your employer or pension provider how much Income Tax to deduct from your pay. In this guide, we’ll break down the list of UK tax codes and what they mean, so you can understand your payslip, avoid paying too much tax, and know what to do if your tax code is wrong.
Table of Contents
What Are Tax Codes
A tax code is used by HM Revenue and Customs (HMRC) to show how much tax-free income you are entitled to in a tax year. Your employer uses this code to calculate how much Income Tax should be taken from your wages or pension. Each code is unique to your personal circumstances, reflecting your allowances, benefits, and employment status. Your tax code is usually made up of numbers and letters, for example, 1257L or BR.
How Tax Codes Work
Every UK taxpayer has a Personal Allowance, which is the amount you can earn before you start paying Income Tax. For the 2024–25 tax year, the standard Personal Allowance is £12,570.
Your tax code shows how much of that allowance applies to your income.
For example:
- The code 1257L means you can earn £12,570 tax-free in a year.
- The letter L means you are entitled to the standard Personal Allowance.
Your employer multiplies the number part of your code by ten to find out how much income is tax-free, then deducts tax based on your income level.
List of Common Tax Codes and What They Mean
Here’s a list of the most common tax codes in the UK and what each one means.
| Tax Code | Meaning | Who It Applies To |
|---|---|---|
| 1257L | Standard tax code for most employees | Most people with one job and no special tax circumstances |
| BR | Basic rate tax (20%) applied to all income | People with a second job or pension |
| D0 | Higher rate tax (40%) applied to all income | High earners with multiple jobs |
| D1 | Additional rate tax (45%) applied to all income | Very high earners with additional income sources |
| NT | No tax deducted | People whose income is not taxable, such as some non-residents |
| 0T | No Personal Allowance applied | Employees without a tax code or who have used up their allowance |
| K Codes (e.g., K300) | You owe tax from previous years or receive untaxed benefits | Those with company benefits or underpaid tax |
| T | Your tax code includes adjustments | Complex cases where HMRC reviews personal allowances |
| M | Marriage Allowance received | People whose spouse or civil partner has transferred part of their allowance |
| N | Marriage Allowance given | Those who have transferred part of their allowance to their spouse |
| W1 / M1 (Week 1 / Month 1) | Emergency tax code applied temporarily | New employees or people changing jobs mid-year |
| S Prefix (e.g., S1257L) | Scottish tax code | Employees who live in Scotland and pay Scottish Income Tax |
| C Prefix (e.g., C1257L) | Welsh tax code | Employees who live in Wales and pay Welsh Income Tax |
Emergency Tax Codes
If you start a new job and your employer doesn’t have your previous tax details, you might be placed on an emergency tax code like 1257L W1/M1. This means your income is taxed as if you’re only entitled to one month’s allowance, not the full year. It’s a temporary measure until HMRC updates your records. Once your employer receives the correct tax information, your tax code should change automatically, and any overpaid tax will usually be refunded in your next payslip.
Learn how P60 Form work.
How to Check Your Tax Code
You can find your tax code on:
- Your payslip
- Your P45 or P60 form
- Your personal tax account on the HMRC website
Checking your tax code regularly ensures that you’re paying the right amount of tax and not losing money unnecessarily.
If something doesn’t look right for example, if you’ve changed jobs, started receiving a pension, or claimed new benefits contact HMRC or your accountant to review it.
How HMRC Calculates Your Tax Code
HMRC looks at several factors when assigning your tax code:
- Your income and tax allowance
- Any company benefits such as a car or health insurance
- Marriage Allowance claims
- Pension contributions
- Underpaid or overpaid tax from previous years
These elements can cause your tax code to change during the year.
For example, if you receive a company car, HMRC may reduce your Personal Allowance to account for the benefit, resulting in a lower number in your tax code.
Checkout how income tax calculate.
What Happens If Your Tax Code Is Wrong
An incorrect tax code can mean you are paying too much or too little tax.
If you notice your code doesn’t match your situation, you can:
- Log in to your HMRC Personal Tax Account.
- Check your employment details and income.
- Report any errors or missing information.
HMRC will then issue an updated code to your employer, and any refunds or adjustments will be made automatically.
How to Correct Overpaid or Underpaid Tax
If you’ve paid too much tax due to an incorrect code, HMRC will usually send you a P800 tax calculation or contact you directly.
You can get a refund by:
- Receiving a cheque from HMRC
- Having the overpayment added to your next payslip
- Adjusting your tax code for the following year
If you owe tax, HMRC may change your code or ask you to make a one-off payment.
Why Your Tax Code Might Change
Your tax code can change during the year for several reasons:
- You start or leave a job
- You begin receiving a pension
- You claim Marriage Allowance
- You have a company benefit or expenses
- Your income level changes significantly
Whenever HMRC updates your tax code, they send you a Notice of Coding explaining the change. It’s important to check this notice carefully to ensure it’s accurate.
Final Thoughts
Understanding the list of UK tax codes and what they mean can help you take control of your finances. Your tax code affects how much you take home each month, and even a small error can cost you hundreds of pounds a year. Checking your payslip regularly, updating HMRC when your circumstances change, and seeking professional help if something looks off can ensure you always pay the right amount.
If you’re unsure about your tax code or think you’re paying the wrong amount of tax, speak to a professional accountant. Our experts can help you review your payslips, correct tax code issues, and claim any refunds you’re owed.
FAQs
How often do tax codes change?
Your tax code can change at any time if your income or benefits change, but it’s usually reviewed annually.
What does the letter L mean in a tax code?
The letter L means you are entitled to the standard Personal Allowance.
Why do I have two different tax codes?
If you have more than one job or pension, you might have different tax codes for each source of income.
Can HMRC make mistakes with tax codes?
Yes. Errors can happen if information isn’t updated promptly. Always check your code regularly.
What is a K tax code?
A K code means your untaxed income or benefits are greater than your tax-free allowance, so extra tax will be deducted.
