Your tax code tells your employer how much tax-free income you are entitled to. The most common code is 1257L, which means you have the standard personal allowance of £12,570.
How to read your tax code: the number is your tax-free allowance divided by 10, and the letter indicates your situation.
1257L — standard code for most employees. Personal allowance of £12,570. 1257L M — you receive Marriage Allowance (your partner transferred some allowance to you). 1257L N — you have transferred some of your allowance to your partner. BR — all income from this job is taxed at basic rate (20%). Common for second jobs. D0 — all income taxed at higher rate (40%). D1 — all income taxed at additional rate (45%). 0T — no personal allowance. Used when you earn over £125,140 or when HMRC does not have enough information. K — you owe tax from a previous year. The K code adds to your taxable income rather than giving you an allowance. W1 or M1 — emergency tax code. Tax is calculated on a week-by-week or month-by-month basis without considering your full year position. S — you pay Scottish income tax rates. C — you pay Welsh income tax rates.
If your tax code is wrong, you might be paying too much or too little tax. Common reasons for wrong tax codes include not updating HMRC about benefits or second jobs, Marriage Allowance not being applied, company car or benefits changes, or incorrect information from a previous employer.
To check your tax code, log into your HMRC Personal Tax Account online or call HMRC. If you have overpaid tax due to a wrong code, HMRC will usually issue a refund automatically through a P800 tax calculation, though this can take several months.
Use our take-home pay calculator to check what your take-home should be on your current tax code.