Updated for the 2026/27 tax year. Tax rates, thresholds and the standard personal allowance shown here are current as at April 2026. Subject to change at HMRC’s discretion. Take independent tax advice for your individual circumstances.
If you have ever opened a payslip and wondered what the letters and numbers next to “Tax Code” actually mean, you are not alone. Roughly 30 million UK employees and pensioners receive a tax code from HMRC each year, and most have no idea what theirs is telling them. Every common UK tax code is set out below with a plain-English explanation, what each letter means, what the numbers represent, and what to do if yours looks wrong.
What is a tax code?
A tax code is a short combination of numbers and letters that HMRC sends to your employer or pension provider. It tells them how much tax to deduct from your pay or pension each month under the PAYE (Pay As You Earn) system. The code reflects your tax-free personal allowance, any other untaxed income, and adjustments for benefits, expenses, or earlier under or overpayments.
Your tax code does not change the total tax you owe over a year. It just controls how that tax is collected month by month. If the code is wrong, the right tax still gets calculated at year-end, but you may have over or underpaid during the year and need a refund or a bill.
How to read your UK tax code
A standard tax code has two parts: a number, then one or more letters.
- The number shows how much income you can earn before paying tax, divided by ten. The standard 2026/27 code, 1257L, means a £12,570 personal allowance.
- The letters show your circumstances: standard allowance, second job, no allowance, Scottish or Welsh rate, marriage allowance transfer, and so on.
So 1257L = £12,570 tax-free personal allowance, standard situation, normal PAYE deduction on everything above that. 1257L is the most common UK tax code by a wide margin.
List of UK tax codes and what they mean
Below is every standard tax code letter HMRC issues, with a plain-English explanation of when you would see it.
L : Standard personal allowance
You are entitled to the full standard personal allowance (£12,570 for 2026/27). The number tells you exactly how much tax-free pay you get. Most employees on PAYE have an L code.
M : Marriage allowance recipient
Your spouse or civil partner has transferred 10% of their personal allowance to you. You get £1,260 more tax-free pay than the standard L code holder.
N : Marriage allowance donor
You have transferred 10% of your personal allowance to your spouse or civil partner. You get £1,260 less tax-free pay.
T : Other calculations needed
HMRC has applied other adjustments to work out your allowance. Often used when income is around the £100,000 mark where the personal allowance starts to taper.
0T : No personal allowance
You have used up your personal allowance, or you have started a new job and your new employer does not yet have the right details. Tax is deducted from every pound at the relevant rate band. Common temporarily when changing jobs.
BR : Basic Rate
All your income from this job or pension is taxed at the basic rate (20% in England, Wales and Northern Ireland). BR is normal for a second job where your full personal allowance is already used by the first.
D0 : Higher Rate
All income from this source is taxed at the higher rate (40%). Used for a second income source where the first already takes you into the higher band.
D1 : Additional Rate
All income from this source is taxed at the additional rate (45%). Used for a second source where the first already takes you into the additional rate band (income over £125,140).
NT : No Tax
No tax is deducted at all. Rare in PAYE; usually applies to certain self-employed earnings paid by an employer (such as some sub-contractors), to seafarers, or to specific overseas-resident pension recipients.
K : Negative allowance
You have untaxed income that exceeds your personal allowance, often because of company benefits, a state pension, or recovering tax from a previous year. A K code adds notional income to your salary so PAYE collects extra tax. K codes are capped at 50% deduction of pay in any pay period.
S : Scottish rates
You live in Scotland and pay Scottish Income Tax. The bands and rates differ from the rest of the UK (Scotland has a starter rate, basic rate, intermediate rate, higher rate, advanced rate, and top rate as of 2026/27).
C : Welsh rates
You live in Wales and pay Welsh Rates of Income Tax. Currently the Welsh rates align with the rest of the UK, but the Senedd has the power to vary them.
Emergency tax codes: W1, M1 and X explained
An emergency tax code is used when HMRC does not yet have your full details. W1 means “week 1” basis (weekly paid), M1 means “month 1” basis (monthly paid), X is the generic term. Each pay period is treated as if it were the first of the tax year, so no cumulative adjustments are made. Emergency tax codes usually correct themselves once HMRC has your P45 or new starter information, but if yours has been running for more than a couple of months it is worth checking your personal tax account to see why.
The most common reason for being put on an emergency tax code is starting a new job without a P45 from your previous employer, or where HMRC is missing recent information about you. The emergency code applies the standard personal allowance but on a non-cumulative basis, which can mean you overpay tax for a short period before the right code catches up.
What does the 1257L tax code mean specifically?
1257L is the default UK tax code for the 2026/27 tax year. It means:
- You have the standard HMRC personal allowance of £12,570 per year
- You are entitled to the full allowance, no transfers or reductions
- Your tax is calculated on a cumulative basis throughout the year
- You can earn £1,047.50 per month before paying any income tax (HMRC personal allowance applied monthly)
If you are on 1257L and your only income is from one job paying less than £50,270, your tax position is straightforward: 20% on everything between £12,570 and £50,270, with the personal allowance applied evenly across the year.
How HMRC works out your tax code
HMRC starts with your standard personal allowance for the tax year. They then add or subtract for:
- Taxable benefits in kind (company car, private medical insurance, fuel for personal use), which reduce your allowance
- State pension, which uses up part of your allowance (the state pension is taxable but paid gross)
- Other untaxed income (rental income, savings interest above the personal savings allowance, dividends above the £500 dividend allowance)
- Underpayments from a previous tax year that HMRC is collecting through PAYE
- Allowable expenses such as professional fees or working-from-home costs
The final adjusted figure is divided by ten and rounded down, giving the number portion. The letter is chosen based on your circumstances. The code is sent to you on a P2 Notice of Coding and to your employer on a P6.
How to find out your tax code
Your current tax code appears in four places. For a deeper walkthrough of the P2 Notice of Coding HMRC sends, see our HMRC tax codes and PAYE Coding Notice guide.
The four places:
- Your payslip, usually near the top alongside your NI number
- Your P60 at the end of each tax year
- Your P45 when you leave a job
- Your HMRC personal tax account at gov.uk/personal-tax-account
The personal tax account also shows how the code was calculated, lists every component HMRC has used, and lets you challenge anything that looks wrong.
What to do if your tax code is wrong
If you suspect your tax code is incorrect, do not wait for the year-end. Tell HMRC as soon as possible:
- Sign in to your personal tax account at gov.uk and use the “Check your Income Tax” service
- Or call HMRC on 0300 200 3300 (Mon-Fri 8am-6pm)
- Have your National Insurance number and most recent payslip to hand
Common reasons a code is wrong include: a benefit you no longer receive still being included, a job you have left still showing as active, an old underpayment continuing to be deducted after it has been cleared, or HMRC missing a new source of taxable income.
If you have overpaid, HMRC will normally refund you through your salary via an adjusted code for the rest of the year. If the year has already ended, you can claim a refund directly.
Tax codes for second jobs and multiple pensions
If you have more than one employment or pension, HMRC will usually:
- Apply your full personal allowance to your main source (typically the highest paying), giving it an L code
- Apply a BR, D0, or D1 code to the second and further sources, with no allowance attached
You can ask HMRC to split your personal allowance differently if it suits your circumstances (for example, if the secondary income is more predictable than the main one).
Self-employed people and tax codes
If your only income is self-employment, you do not have a tax code at all. PAYE applies only to employment and pension income. Self-employed people calculate their tax through Self Assessment, paying twice a year via payments on account.
If you are self-employed and need accounting support AND have a part-time employed role or a pension, the employed or pension income will have a tax code (often BR or D0, because your personal allowance is normally absorbed by Self Assessment).
Tax codes for pensioners
State pension and retirement planning matters here: state pensioners receive the state pension gross (no tax deducted) but it is taxable income. HMRC accounts for this in your tax code if you also receive a private pension or have other taxable income. Your private pension provider then deducts tax via PAYE using a code that has been reduced by the state pension amount.
If your state pension exceeds your personal allowance and you have no other taxable income, HMRC will issue a Simple Assessment letter asking for the difference once a year.
What happens when your tax code changes mid-year
HMRC can change your tax code at any time. Common triggers are starting a new job, receiving a new company benefit, your state pension starting, or HMRC discovering an underpayment. Your employer will use the new code from the next pay run after they receive it. If the change creates a refund, it usually appears in your following payslip as an adjustment.
Frequently asked questions
What is the standard UK tax code for 2026/27?
1257L. The number reflects the £12,570 standard personal allowance, the L means you are entitled to that full standard allowance.
What does BR tax code mean?
Basic Rate. All income from this source is taxed at 20% (in England, Wales and Northern Ireland), with no personal allowance applied. Most commonly seen on a second job.
What does D0 tax code mean?
Every pound from this source is taxed at the higher rate of 40%. Used when your first income source has already taken you into higher-rate territory.
What does K tax code mean?
Your untaxed income (benefits, state pension, owed tax) is more than your personal allowance. A K code adds notional income to your pay so HMRC can collect the extra tax. Deductions are capped at 50% of your pay in any pay period.
What is an emergency tax code?
W1, M1 or X. Used when HMRC does not yet have full details about your income. Each pay period is taxed in isolation, so no cumulative adjustments happen until the right code is issued.
How do I check if my tax code is correct?
Sign in to your personal tax account at gov.uk/personal-tax-account. The service shows the code, the components HMRC used to calculate it, and lets you challenge anything that looks wrong.
Who works out my tax code?
HMRC, not your employer. Your employer simply applies whatever code HMRC sends them via a P6 notice. If you think the code is wrong, contact HMRC directly, not payroll.
Do self-employed people have a tax code?
No, not for the self-employment income itself. Self-employed earnings go through Self Assessment. But if you also have an employed role or a pension, that income will have a PAYE code.
What does the letter S mean in a tax code?
You are a Scottish taxpayer. Scotland has its own income tax bands and rates which differ from the rest of the UK. The S prefix tells your employer to apply Scottish rates.
What does the letter C mean in a tax code?
You are a Welsh taxpayer. Welsh Rates of Income Tax currently align with the rest of the UK, but the Senedd has the power to set different rates in future.
Can my employer change my tax code?
No. Only HMRC can issue or change a tax code. Your employer must apply whatever HMRC sends them and cannot deviate, even at your request.
Understanding your tax code: the bigger picture
Understanding your tax code is more than reading the letters and numbers. It is about knowing which sources of income HMRC has assumed, which benefits are included, whether any old underpayments are still being collected, and whether your circumstances have shifted since the code was last issued. A wrong tax code costs people thousands of pounds a year that they only discover at year-end, if at all.
Tax codes work on the assumption that your circumstances stay broadly the same year on year. They do not. New job, second job, company car coming or going, marriage allowance transfer starting or stopping, state pension starting, a one-off bonus pushing you into a new band: every one of these should prompt a tax code check. The most reliable habit is a five-minute glance at your personal tax account whenever your payslip looks different from the previous month.
If you have spotted an incorrect tax code or you have just inherited a complicated one (multiple income sources, K code, recent under or overpayment), the simplest first step is the contact form below. We will look at your code, your payslips, and your wider tax position together.
Speak to a Manchester chartered accountant about your tax code
Fill in the form and a Jack Ross adviser will get back to you within one working day. No obligation, just a clear answer on what your code means and whether it is right.
Where else to get help
For deeper technical reference, HMRC publishes the full PAYE Manual and the ICAEW personal tax pages are a good independent reference for the professional view.
If your code is straightforward but you want it sense-checked, your personal tax account on gov.uk is the fastest route. If your situation is more complex (multiple income sources, large benefits in kind, K code, recent under or overpayment, or a recently triggered Self Assessment requirement), a Manchester chartered accountant for personal tax can review your code and your overall position together.
Jack Ross has been advising individuals and families on PAYE, Self Assessment, and tax planning since 1948 from our Manchester office. If you would like a tax adviser to look at your code, your payslips, and your wider tax position, get in touch and we will set up a short call.