UK tax codes explained: every employee in the UK has one, but few know what it actually means.
A UK tax code is a combination of numbers and letters used by HMRC to tell your employer or pension provider how much Income Tax to deduct from your pay. It reflects your tax-free Personal Allowance and any adjustments based on your income, benefits, or previous tax owed.
The most common tax code is 1257L, which means you are entitled to the standard Personal Allowance. Other tax codes may indicate different circumstances, such as multiple jobs, underpaid tax, or emergency situations.
Your tax code is updated by HMRC whenever your financial situation changes, and it ensures you pay the correct amount of tax through the PAYE system.
Our guide on UK tax codes explained provides a simple breakdown of how UK tax codes work and how to make sure yours is accurate however please book a UK tax planning consultation if you have queries.
What Is A Tax Code For?
Your tax code is what your employer uses to determine the amount of Pay As You Earn (PAYE) tax to withhold from your salary each month via UK payroll. The combination of letters and numbers informs your employer how much Personal Allowance should be given, whether any additional notional income or benefits should be considered, and whether English or Scottish tax rates apply.
Your tax code is issued by HMRC at the start of your employment based on the new joiner form you complete. This provides HMRC with details of your other jobs in the tax year and your student loan repayments.
HMRC may update your tax code during the year based on information they receive from you and your employer including your estimated taxable income, employment benefits, and other sources of income.
Although HMRC issues your tax code, it is ultimately your responsibility to check that it is correct. Your employer is legally required to apply the code provided by HMRC, even if it results in the wrong amount of tax being withheld.
Understanding your tax code is therefore key to ensuring that your monthly tax withholding is correct and our UK tax codes explained guide addresses the common codes and what these mean.
Once you’ve had your UK tax codes explained, it becomes much easier to check whether you’re paying the right tax.
What Does My Tax Code Mean?
Your tax code will consist of letters and numbers and can be found on your UK payslips or P60. You can also check your tax code on your HMRC online account.
Your tax code will most likely contain an L, T or K and a number. L and T codes mean that you are entitled to a tax-free deduction (most likely related to the Personal Allowance) and the deduction is equal to 10 times the figure in your tax code. K codes mean that additional income is being subject to withholding tax equal to 10 times the figure in your tax code.
Common tax codes are explained in the following section however these letters mean:
Tax Code Containing L
Your tax code includes the full tax-free Personal Allowance of £12,570. The total tax-free deduction included in your tax code is equal to 10 times the figure in your tax code.
For example, a tax code of 1257L includes a deduction for the full £12,570 Personal Allowance.
Tax Code Containing T
Your tax code does not include the full Personal Allowance however you are still in receipt of some Personal Allowance. The total tax-free deduction included in your tax code is equal to 10 times the figure in your tax code.
For example, a tax code of 500T includes a tax-free deduction of £5,000. Individuals lose their entitlement to the Personal Allowance by £1 for every £2 their income exceeds £100,000 and therefore HMRC will calculate the Personal Allowance included in your tax code based on their estimate of your income.
Tax Code Containing K
Your tax code contains additional income that is being taxed via payroll. The total additional income being taxed via payroll is equal to 10 times the figure in your tax code.
For instance, a tax code of K300 includes additional taxable income of £3,000. This is likely the case if you have non-cash taxable benefits included in your tax code or have a tax underpayment factored into your tax code.
Tax Code Containing S
In addition to the above letters, your tax code may include the letter S. This means that your income is being subjected to Scottish rates of tax rather than English rates. HMRC are likely to implement this if your correspondence address is in Scotland however they should be informed if you are not Scottish taxpayer.
Common UK Tax Codes Explained
Below are the most common codes featured in our UK tax codes explained guide.
1257L
This is the most common tax code in the UK and it means that the full £12,570 Personal Allowance is included in your tax code. No additional income or deductions are being included.
0T
0T is often referred to as an emergency tax code, although it is more accurately a code used where HMRC does not have enough information to calculate your correct tax-free allowance.
0T means that no Personal Allowance is included in your tax code. This is commonly implemented when HMRC do not have enough information to determine your tax code and therefore 0T is implemented as it typically results in an over-withholding.
BR
All of your income is subject to basic rate tax at 20%. This is commonly applied to individuals with multiple jobs as they receive the benefit of the Personal Allowance through their other employment and their total income does not exceed the basic rate threshold of £50,270.
D0
All of your income is subject to higher rate tax at 40%. This is commonly applied to individuals with multiple jobs because their Personal Allowance and basic rate band are already being used against income from another employment.
D1
All of your income is subject to additional rate tax at 45%. This is commonly applied to individuals with multiple jobs as they receive the benefit of the basic rate and higher rate thresholds through their other employment.
NT
Standing for ‘no tax’, an NT tax code means that no PAYE tax will be withheld. This is commonly relevant for non-resident individuals who are not subject to UK tax.
Week 1/Month 1 Vs Cumulative UK Tax Codes Explained
In addition to the tax code itself, there are two ways in which the code can be implemented; on a Week 1 / Month 1 basis or on a cumulative basis.
Week 1 / Month 1 tax codes will typically include a suffix of ‘W1M1’ or ‘M1’ and cumulative tax codes will typically have no suffix.
Understanding the difference between Week 1/Month 1 and cumulative codes is a key part of having your UK tax codes explained clearly.
Cumulative UK Tax Codes Explained
Cumulative tax codes are more common and entitle the individual to a proportion of the Personal Allowance and rate bands dependent on the month of the tax year.
For example, when an individual receives their first payment of the tax year in April, their tax will be calculated using 1/12th of the Personal Allowance included in their tax code and 1/12th of the relevant tax rate bands.
Then in May, tax on the individual’s pay for the tax year to date (April + May) will be calculated using 2/12ths of the Personal Allowance etc.
This ensures that most individuals’ net pay remains consistent throughout the year as they receive an equal portion of the Personal Allowance and rate bands each month, and ensures they receive the full Personal Allowance and rate bands by the end of the year.
It can present some challenges if an individual starts part way through the year as they may receive a higher proportion of the Personal Allowance and rate bands in their earlier payments.
For example, an individual starting employment in January (the 10th month of the tax year) will receive 10/12ths of the Personal Allowance despite only having been paid once in the year. As such, their net pay is likely to be higher in January than February despite being paid the same in both months.
HMRC’s solution to this is Week 1 / Month 1 tax codes which are commonly implemented for individuals starting employment part way through a year.
Week 1 / Month 1 UK Tax Codes Explained
Week 1 / Month 1 tax codes entitle the individual to 1/12th of the Personal Allowance and rate bands irrespective of which month they are being paid. They also do not consider payments made to the individual earlier in the year and therefore each month is treated in isolation.
Whilst this does provide consistent net pay for individuals starting at any time in the year, it can result in over-withholding as individuals may not receive the full Personal Allowance in the year.
For example, an individual starting in January on a 1257L Week 1 / Month 1 tax code will have consistent tax withholding in January, February and March as each month is considered in isolation however at the end of the year they will only have received 3/12ths of the Personal Allowance since they were only on the payroll for 3 months in the year which will result in a tax over-withholding.
What Happens If My Tax Code Is Wrong?
If your tax code is wrong then you may be paying too much or too little UK tax via PAYE withholding. Whilst this is not ideal, it is not irreversible and any under or over payments will be requested from you/refunded to you automatically by HMRC following the end of the tax year or dealt with via your tax return if you are in self-assessment.
Unexpected payments are never welcome and it is therefore important to know if your tax withholding is accurate to ensure you do not receive any surprises at year-end.
How Can I Change My Tax Code?
If you suspect that your tax code is wrong, you can contact HMRC to request that it is changed. Your authorised tax agent can also discuss your tax code with HMRC on your behalf.
To change your tax code, HMRC must be informed of the reason that the current code is incorrect and the changes that should be made.
HMRC will then issue the updated tax code to you and your employer to be implemented for your next pay period.
UK Tax Codes Explained For Expats
The UK PAYE legislation is separate from the UK tax legislation and therefore the withholding requirements do not always match the individual’s tax position which can present unique challenges for expats. This section of our UK tax codes explained guide covers how PAYE rules apply to expats and those leaving the UK.
Leaving UK Employment
If you leave the UK part way through the tax year and end your UK employment, it is possible that you will be entitled to a UK tax refund. This is due to the cumulative basis of tax codes explained above meaning that you did not receive the full benefit of the Personal Allowance while employed.
You can request an early repayment of your UK tax refund via HMRC’s Form P85. This is recommended where all of your UK taxable income has been subjected to PAYE withholding and you do not expect any further UK taxable income after your departure. If you have ongoing UK taxable income or you cease UK tax residence on a different date to ending your UK employment, a P85 is not typically recommended and a self-assessment tax return is commonly filed instead.
Leaving the UK but remaining UK employed
If you leave the UK and break UK tax residence but remain employed by a UK company, UK PAYE withholding will continue until HMRC are informed otherwise.
If you meet the conditions to break UK tax residence, it is commonly recommended that you obtain an NT (no tax) code to cease UK withholding. Subject to your specific position, an NT code may not be correct and a reduced withholding may be more appropriate however we recommend that you receive professional expat tax advice if you are leaving the UK and remaining UK employed.
If you’re unsure whether your UK tax code is correct, or you’ve moved overseas, have multiple employments, or believe you’ve paid too much tax, we can review your PAYE position and help ensure you’re paying the correct amount of UK tax.
UK Tax Codes Explained: FAQs
What does my UK tax code mean?
Your UK tax code shows how much of your income is tax-free and how much will be taxed. Each number and letter has a specific meaning, which HMRC uses to calculate how much tax to deduct from your salary.
What is an emergency tax code?
An emergency tax code is a temporary tax code used when HMRC does not have enough information to calculate your correct tax code. Common emergency tax codes include 1257L W1, 1257L M1 and 0T.
Emergency tax codes are often used when you start a new job without providing a P45 or when HMRC has not yet received up-to-date information about your circumstances. They can result in you paying too much or too little tax until your correct tax code is issued. Once HMRC updates your records, any overpaid or underpaid tax is usually corrected automatically through payroll.
Why has HMRC changed my tax code?
HMRC may change your tax code if your circumstances change or if they receive new information about your income. This can happen if you start a new job, begin receiving a pension, receive taxable benefits such as a company car or private medical insurance, or if HMRC updates its estimate of your annual income.
HMRC may also adjust your tax code to collect tax owed from previous years or to reflect changes to your Personal Allowance. If you receive a notice that your tax code has changed and you do not understand why, you should review the explanation provided by HMRC or contact them to check that the new code is correct.
Can I have more than one UK tax code?
Yes. If you have more than one job or receive income from multiple sources, such as a pension alongside employment, you may have a different tax code for each source of income.
Typically, your full Personal Allowance will be allocated to your main source of income, with secondary employments using tax codes such as BR, D0 or D1. This helps ensure that your Personal Allowance is not applied more than once.
How can I check if my UK tax code is correct?
You can check your UK tax code on your payslip, P60, or through your HMRC online account. If it doesn’t match your circumstances, contact HMRC – they can update it and issue a new notice to your employer.
What happens if my UK tax code is wrong?
If your UK tax code is wrong, you might overpay or underpay Income Tax. HMRC will usually correct this automatically once notified, but it’s always best to check your payslips regularly to avoid surprises.
How are UK tax codes calculated?
UK tax codes are calculated based on your personal allowance, income, and any adjustments – such as company benefits, untaxed income, or previous underpayments. The numbers usually represent your tax-free allowance divided by 10.
What is the most common UK tax code?
The most common UK tax code for the 2025/26 tax year is likely to be 1257L, which means you’re entitled to the standard Personal Allowance. However, if you have multiple jobs, benefits, or other income, your code may differ.
Do UK tax codes change every year?
Yes – UK tax codes can change each tax year when the Personal Allowance or your financial situation changes. HMRC will issue a new code if adjustments are needed.