UK Tax Codes Explained: What the Letters and Numbers Mean

Your tax code tells your employer how much tax-free income you're entitled to before tax kicks in. The most common code is 1257L, which means you get £12,570 tax-free (the Personal Allowance for 2025/26). The number is your allowance divided by 10. The letter indicates your situation: L means you're entitled to the standard Personal Allowance. Your employer uses this to calculate how much Income Tax to deduct each month.

L — standard Personal Allowance. BR — all income taxed at basic rate (20%), usually for a second job. D0 — all income taxed at higher rate (40%). 0T — no Personal Allowance (often means HMRC doesn't have enough information). K — you owe tax from a previous year, so your allowance is reduced. M — you've received Marriage Allowance from your partner. N — you've transferred Marriage Allowance to your partner. W1/M1 — emergency tax code (temporary, based on single pay period).

Common errors: you've changed jobs and your new employer doesn't have the right code, you have two jobs and both are using the full Personal Allowance (you'll owe tax), you've received a benefit-in-kind that's been applied twice, or HMRC has incorrect information about your circumstances. Signs your code is wrong: your take-home pay suddenly changes without a pay rise, or your tax code doesn't match the standard 1257L when it should.

Check your tax code on your Personal Tax Account at gov.uk. If it's wrong, you can update your details online and HMRC will issue a new code to your employer. If you've overpaid tax, you can claim a refund — HMRC estimates £1 billion in tax overpayments goes unclaimed each year. Check your code every April when the new tax year starts, and whenever your circumstances change (new job, marriage, losing a benefit).