Your tax code determines how much income tax your employer deducts from every payslip. The standard 2026/27 tax code is 1257L, which means you have a £12,570 personal allowance — the amount you can earn before any income tax is deducted. If your code is wrong, HMRC will either undercollect tax (meaning a bill later) or overcollect (meaning you are owed a refund). Millions of UK workers are on the wrong tax code at any given time, usually without realising it.
What Your Tax Code Number Means
The number in your tax code represents your tax-free allowance for the year. HMRC drops the last digit to get that figure:
| Tax code number | Annual tax-free allowance |
|---|---|
| 1257 | £12,570 |
| 1383 | £13,830 (marriage allowance received) |
| 1131 | £11,310 (marriage allowance transferred) |
| 500 | £5,000 |
| 0T | No personal allowance |
Rule: Multiply the number by 10 to get your annual tax-free income from that source.
What the Letter in Your Tax Code Means
The letter after the number tells HMRC — and your employer — which set of circumstances applies to you. Each letter changes how your allowance is calculated.
| Letter | Meaning | Who gets it |
|---|---|---|
| L | Standard personal allowance | Most UK employees |
| M | Received marriage allowance from partner | Non-taxpayer who transferred allowance |
| N | Transferred marriage allowance to partner | Basic rate taxpayer who gave allowance away |
| T | HMRC needs more information or you have requested review | Various reasons |
| BR | Basic Rate — no personal allowance | Second job / second pension |
| D0 | All income taxed at higher rate (40%) | High earner with a second income source |
| D1 | All income taxed at additional rate (45%) | Additional rate taxpayer with a second source |
| NT | No Tax | Non-UK tax resident or specific exemption |
| 0T | Zero personal allowance — taxed at appropriate rate | New employee with no P45, or allowance exhausted |
| K | Deductions exceed allowances | Company car, state pension plus other income |
| S | Scottish income tax rates apply | Scottish resident |
| C | Welsh income tax rates apply | Welsh resident |
| W1 / M1 | Emergency code (week 1 / month 1 basis) | New job with missing PAYE details |
1257L: The Standard Tax Code in Detail
1257L is the most common UK tax code. For 2026/27 it means:
- Your employer deducts no income tax on the first £12,570 you earn in the tax year.
- Income between £12,571 and £50,270 is taxed at 20% (basic rate).
- Income between £50,271 and £125,140 is taxed at 40% (higher rate).
- Income above £125,140 is taxed at 45% (additional rate).
The personal allowance is frozen at £12,570 until at least 2028.
Worked Example: How 1257L Works on a £35,000 Salary
On a £35,000 annual salary with tax code 1257L:
| Item | Amount |
|---|---|
| Gross salary | £35,000 |
| Less: personal allowance | −£12,570 |
| Taxable income | £22,430 |
| Income tax at 20% | £4,486/year (£374/month) |
| National Insurance (8%) | £1,794/year (£150/month) |
| Estimated take-home | ~£28,720/year (~£2,393/month) |
See the full breakdown in our £35,000 salary after tax calculator.
Emergency Tax Codes
If you start a new job without providing a P45, or if HMRC does not have your up-to-date details, your employer may use an emergency tax code:
- 1257L W1 (Week 1 basis) — you are taxed on each week’s pay in isolation rather than cumulatively across the year.
- 1257L M1 (Month 1 basis) — same as W1 but applied monthly.
- 0T — no personal allowance at all; every pound is taxed.
Emergency codes often result in overpaying tax, particularly early in the tax year. Once HMRC updates your record — usually within a few payroll cycles — your employer will be issued a new code and will refund any overpaid tax through your payslip.
K Codes: When Deductions Exceed Your Allowance
A K code appears when your total deductions — such as the taxable value of a company car benefit, underpaid tax being recovered, or State Pension income that exceeds your allowance — are larger than your personal allowance.
Example: If your company car benefit is worth £15,000 and your personal allowance is £12,570, HMRC effectively adds £2,430 to your taxable income rather than deducting it. Your K code might read K243 (£2,430 rounded, in K notation).
K codes mean your employer deducts more tax than a standard 1257L employee. HMRC caps the deduction to prevent your take-home pay falling below zero.
Scottish and Welsh Tax Codes
Scottish residents (S prefix, e.g. S1257L) pay income tax at Scottish rates, which differ from the rest of the UK above the personal allowance:
| Scottish band | 2026/27 rate | Income range |
|---|---|---|
| Starter | 19% | £12,571–£14,921 |
| Basic | 20% | £14,922–£26,270 |
| Intermediate | 21% | £26,271–£43,662 |
| Higher | 42% | £43,663–£75,000 |
| Advanced | 45% | £75,001–£125,140 |
| Top | 48% | Over £125,140 |
Welsh residents (C prefix, e.g. C1257L) pay the same rates as the rest of England and Northern Ireland — the Welsh Government currently mirrors UK income tax rates.
Marriage Allowance Tax Codes
If you or your partner have claimed the marriage allowance:
- The giving partner’s code becomes 1131N (personal allowance reduced by £1,260 to £11,310).
- The receiving partner’s code becomes 1383M (personal allowance increased by £1,260 to £13,830).
The receiving partner saves £252/year in income tax.
Common Reasons Your Tax Code Is Wrong
HMRC relies on information from employers, pension providers, and your own returns to set your code. Errors are common:
- New job or second job — employer has not received updated PAYE details from HMRC.
- Company car or benefit-in-kind — taxable value has changed but HMRC has not updated its record.
- State Pension started — DWP and HMRC records have not yet synced.
- Multiple income sources — income from savings interest, rental income, or dividends has changed.
- Underpaid tax from a prior year — HMRC is recovering this through your current tax code.
- Marriage allowance claim — the transfer has not been processed or has been applied incorrectly.
How to Check and Correct Your Tax Code
Step 1 — Find your current code. Check your payslip, P60, or HMRC personal tax account at gov.uk/check-income-tax-current-year.
Step 2 — Identify the issue. Use the tables above to decode your letter and number. If the allowance implied by the number does not match your actual circumstances, your code is likely wrong.
Step 3 — Contact HMRC. Use your personal tax account (fastest), call 0300 200 3300, or write to HMRC. Do not ask your employer — only HMRC can issue a corrected code.
Step 4 — Receive a P2 notice. HMRC will send you a new “Notice of Coding” (P2) and will instruct your employer to use the corrected code from the next available payroll run.
Step 5 — Claim any overpaid tax. If you overpaid because of a wrong code, HMRC will usually refund this automatically at the end of the tax year, or through your payslip once the code is corrected.
How Much Tax Could a Wrong Code Cost You?
| Error type | Annual tax overpaid | Example |
|---|---|---|
| BR code instead of 1257L | Up to £2,514 | £12,570 allowance wasted at 20% |
| Missing marriage allowance | £252 | Standard case |
| Wrong K code recovery | Varies | Overestimated benefit-in-kind |
| Emergency 0T code for full year | Up to £2,514+ | No allowance, taxed from £0 |
If you have been on the wrong code for multiple years, you can claim a refund for up to four previous tax years.
Related Articles
- UK Income Tax Brackets 2026/27
- What Is PAYE? How Pay As You Earn Works
- National Insurance 2026/27 — Your NIC Bill at Every Salary
- UK Marriage Allowance 2026/27: Save Up to £252 in Tax
- UK Income Tax Guide 2026/27
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