That mysterious code on your payslip — like 1257L or BR — controls exactly how much tax you pay. If it's wrong, you could be overpaying (or underpaying) by hundreds of pounds. Here's what your tax code means and how to check it's correct.
How Tax Codes Work
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 2026/27, frozen until April 2031). 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.
Common Tax Code Letters
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%). D1 — all income taxed at the additional rate (45%). If you're a Scottish taxpayer, your code starts with S (for example S1257L); in Wales it starts with C. 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).
When Tax Codes Go Wrong
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.
How to Fix Your Tax Code
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, usually for up to four previous tax years. Check your code every April when the new tax year starts, and whenever your circumstances change (new job, marriage, losing a benefit).
The bottom line
Your tax code is easy to ignore but important to get right. Spend 10 minutes checking it on gov.uk — you might find you're owed money back, or prevent a nasty tax bill down the line.
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