Tax & Income
Your tax code tells your employer how much income tax to deduct from your pay. Most people ignore it — but a wrong code can mean paying too much or too little tax for the whole year.
A tax code is a combination of letters and numbers that HMRC sends to your employer (or pension provider). It tells them how much of your income to leave untaxed each year before deducting income tax under PAYE (Pay As You Earn).
The most common code for 2026/27 is 1257L. The number comes from your tax-free Personal Allowance (£12,570), divided by 10. The letter tells your employer how to apply that allowance. Most employees are on 1257L, which simply means you get the full standard personal allowance with no adjustments.
How to find your tax code
Multiply the number in your tax code by 10 to get your tax-free income for the year. So:
| Code number | Tax-free amount | Typical reason |
|---|---|---|
| 1257 | £12,570 | Standard personal allowance — most employees |
| 1307 | £13,070 | Higher allowance, e.g. marriage allowance received (+£1,260 = 126 added) |
| 1007 | £10,070 | Reduced allowance, e.g. transferred marriage allowance or untaxed income deducted |
| 500 | £5,000 | Heavily reduced allowance (large benefits in kind, or multiple income sources) |
HMRC rounds down to the nearest £10 when calculating your code number.
The letter after (or sometimes before) the number tells your employer how to apply your allowance and which rate to charge.
L — Standard allowance
You're entitled to the standard personal allowance for the year. The most common suffix. E.g. 1257L.
M — Marriage Allowance received
Your spouse or civil partner has transferred part of their personal allowance to you. Your code will be higher than 1257 — typically 1383M for 2026/27, giving a tax-free amount of £13,830.
N — Marriage Allowance given
You have transferred part of your personal allowance to your spouse or civil partner. Your code will be lower than 1257, typically 1131N for 2026/27.
T — Requires individual calculation
Your circumstances need special handling, for example your allowance is being reduced due to high income or there are multiple income adjustments. HMRC calculates the exact code directly.
BR — Basic Rate on all income
All income from this employment is taxed at 20% with no personal allowance. Common for a second job where your allowance is used against your main income, or when HMRC hasn't received your details yet.
D0 — Higher Rate on all income
All income from this source taxed at 40%. Used when you're a higher-rate taxpayer with multiple jobs or pensions and your basic rate band is already full from another source.
D1 — Additional Rate on all income
All income taxed at 45%. Used when all your income from this source falls in the additional rate band.
NT — No tax
No tax deducted at all. Used for certain situations such as non-UK residents, or people below the age threshold.
0T — Zero allowance
All income taxed from the first pound, but at the correct band rates (20%, 40%, 45%). Used when HMRC has no information about your personal allowance — common at the start of a new job before a P45 arrives, or when you've used all your allowance elsewhere. Different from BR because it does apply higher-rate bands.
K — Negative allowance
A K code means you owe more tax than your personal allowance can cover — the number is added to your income rather than deducted. Common causes include a company car benefit, unpaid tax from a previous year, or other untaxed income above the personal allowance. E.g. K200 means an additional £2,000 is added to your taxable income.
An S prefix (e.g. S1257L) means Scottish income tax rates apply to your earnings — relevant if you live in Scotland. A C prefix (e.g. C1257L) means Welsh rates apply. The rest of the code works the same way.
These appear as suffixes (e.g. 1257L W1 or 1257L M1). They mean your tax is being calculated on a non-cumulative basis — each pay period is treated independently rather than accounting for what you've paid earlier in the year. This can lead to an over- or underpayment that HMRC reconciles at year end. W1 is used for weekly pay and M1 for monthly pay; X is the generic version. They often appear when starting a new job without a P45.
HMRC starts with your personal allowance (£12,570 in 2026/27) and then adds or removes amounts based on your individual circumstances:
HMRC then divides the net allowance by 10 and rounds down to get the code number. If the result is negative (you owe more tax than you have allowance to cover), a K code is issued instead.
HMRC relies on information from employers and your own Self Assessment returns to set your code. When information is missing, outdated, or not yet processed, the wrong code gets issued. Common causes:
Don't ignore PAYE Coding Notices
HMRC sends a P2 notice when your code changes, usually in January or February before the new tax year. Check it against your circumstances — if anything looks wrong, contact HMRC before April to avoid paying the wrong amount for the whole year.
You can only use your personal allowance once. If you have more than one job or pension, HMRC assigns your allowance to your main income source, and secondary sources usually receive a BR or D0 code.
This is normal and correct — it prevents you benefiting from the allowance twice. At the end of the year, HMRC reconciles your total income and tax paid. If you've overpaid (for example, because your second job was lower-paid), you'll receive a refund. If you've underpaid, HMRC will usually adjust your code the following year to collect the difference.
If you want to split your personal allowance across jobs, you can ask HMRC to do this — it can reduce the impact of BR codes on a second income.
Key numbers 2026/27