Salary
TL;DR
Your tax code tells your employer how much tax to deduct from your pay. The number in the code represents the personal allowance you can earn tax-free; the letter indicates your circumstances. The most common code is 1257L - £12,570 tax-free income. Emergency codes (W1, M1, X) result in higher temporary deductions. An incorrect tax code leads to over- or under-payment of tax; check your code via your personal tax account at gov.uk and contact HMRC if it is wrong.
Key facts (2026)
- The standard tax code for 2025/26 is 1257L, representing a personal allowance of £12,570; the number in a tax code is the first part of the allowance divided by 10 (HMRC tax codes guide 2025/26).
- HMRC issues a new tax code to your employer each time your circumstances change; you should receive a PAYE Coding Notice (P2) informing you of any code change and the reasons for it (HMRC PAYE system).
- Emergency tax codes (W1, M1, or X suffix) apply a non-cumulative basis of assessment, typically resulting in higher deductions until the correct code is issued; they are often applied to new employments where HMRC does not yet have full income information (HMRC emergency code guidance).
- The letter K in a tax code indicates that your total deductions exceed your allowances, meaning there is no tax-free pay and HMRC adds additional taxable pay to your earnings for deduction purposes; K codes are common where employees have significant company car or other taxable benefits (HMRC K code explanation).
- HMRC can collect unpaid tax through a PAYE coding adjustment rather than a separate bill; if you underpaid tax in a previous year, HMRC may reduce your personal allowance in your current year's code to collect the amount owed over 12 months (HMRC underpayment collection process).
How tax codes are structured: numbers and letters
A UK tax code typically consists of a number followed by one or more letters. The number represents your tax-free income for the year, calculated by dividing the allowance by 10. A code of 1257L therefore means a personal allowance of £12,570 (1257 x 10 = £12,570). If your allowance is adjusted - for example, reduced by a taxable benefit or increased by the marriage allowance - the number changes accordingly. The letters indicate your specific circumstances: L is the standard suffix for the basic personal allowance; M indicates you have received the marriage allowance transfer; N indicates you have given away the marriage allowance; T indicates your circumstances are more complex and HMRC needs to review your code each year; 0T means all income is taxed with no tax-free pay (used when HMRC has no information about your allowance); and BR means all income from that employment is taxed at basic rate (used when you have multiple employments and your personal allowance is already used elsewhere).
Emergency tax codes: what they mean and how to resolve them
When you start a new job and your employer does not have enough information from HMRC to issue a full tax code, an emergency code may be applied. Emergency codes use a W1 (weekly pay), M1 (monthly pay) or X (irregular pay) suffix and operate on a non-cumulative basis: they tax each pay period in isolation rather than taking account of your full year-to-date earnings and allowances. This typically results in higher tax deductions than would apply on a cumulative basis, particularly in the earlier months of the tax year when you have not yet earned enough to fully use the personal allowance. Emergency codes are resolved automatically when your new employer receives an updated tax code from HMRC, which happens once your previous P45 is processed or HMRC updates your records. If an emergency code persists for more than a few months, contact HMRC directly with your employment details to prompt a code update.
How HMRC uses codes to collect underpaid tax
If HMRC determines that you underpaid tax in a previous tax year - for example, because you had income from multiple sources that was not fully captured through PAYE - it can collect the underpayment by adjusting your current year's tax code rather than issuing a separate bill. The personal allowance in your code is reduced by an amount that, at your marginal tax rate, generates the additional tax needed to collect the underpayment over the year. HMRC typically collects underpayments up to £3,000 through the code adjustment rather than billing directly; amounts above £3,000 may be billed separately. You should receive a P800 tax calculation or a Simple Assessment setting out the underpayment before the code is adjusted; if you believe the underpayment is incorrect, challenge it by contacting HMRC or filing a self-assessment return for the relevant year.
K codes: when deductions exceed allowances
A K code indicates that your total income tax deductions (including taxable benefits in kind) exceed your personal allowance. Rather than providing any tax-free pay, a K code adds a notional amount to your earnings for tax deduction purposes, ensuring that enough tax is collected from the employment to cover your total liability including the benefit-in-kind charge. K codes are most commonly seen for employees with significant company cars or other substantial benefits that HMRC values above the personal allowance. An employee with a company car with a benefit value of £15,000 and a standard personal allowance of £12,570 has net deductions of £2,430, which generates a K code of approximately K243. The maximum HMRC can deduct under a K code in any single pay period is 50 percent of gross pay for that period, preventing the deductions from becoming unmanageable.
Checking and correcting your tax code
You can check your current tax code and the reasons for any adjustments through your personal tax account at gov.uk. Log in with your Government Gateway credentials and navigate to the PAYE section. The personal tax account shows your current code, the breakdown of adjustments to the standard personal allowance, and any benefit-in-kind values that HMRC has included. If you believe your code is wrong - because a benefit value is incorrect, a previous underpayment has already been paid, or your circumstances have changed - contact HMRC by phone or through the personal tax account messaging service. HMRC will review the code and issue a corrected P2 Coding Notice to your employer if a change is warranted. Employers apply the new code from the next payroll run; they cannot retrospectively correct previous pay periods within the same tax year (though HMRC reconciles the cumulative position at year end).
Multiple employments and the allocation of personal allowance
If you have more than one job or pension simultaneously, HMRC allocates the personal allowance to one of them (usually the primary job or pension) and applies a BR or D0 code to the others. The BR code taxes all income from the secondary employment at basic rate (20 percent); the D0 code taxes it all at higher rate (40 percent); and D1 taxes at additional rate (45 percent). Which code applies depends on HMRC's assessment of your total income from all sources. If you believe your secondary employment is being taxed at too high a rate, contact HMRC; they can split the personal allowance between employments or adjust the secondary code to reflect your actual marginal rate on that income. Employees with irregular hours or variable income from multiple sources may find it most accurate to file a self-assessment return rather than relying on PAYE coding to get the right amount.
Related guides
Frequently asked questions
How do I find out if I have been overtaxed?
After the end of each tax year (5 April), HMRC reconciles the tax paid against the actual liability. If you have overpaid, HMRC should send a P800 tax calculation showing the refund. You can also check your position in your personal tax account and, if HMRC has not yet issued a P800, submit a claim for a repayment through the account. Overpayments from previous years can be claimed up to four years after the end of the relevant tax year.
My company car benefit has changed but my tax code has not been updated. What should I do?
Contact HMRC and notify them of the correct benefit value for the current tax year. HMRC will update their records and issue a revised tax code to your employer. Also check with your employer that they have notified HMRC of the benefit on a P11D or P11D(b) if the benefit is not covered by a PAYE settlement agreement. Delays in notification can result in cumulative under-deduction during the year and a lump sum adjustment at year end.
I have just started a new job. What is the best way to ensure I am on the correct tax code from the start?
Provide your new employer with your P45 from your previous employer as soon as possible. The P45 contains your previous pay, tax deducted and tax code, allowing your new employer to use the correct cumulative code from the first pay period. If you do not have a P45 (for example, after a period of self-employment or a gap in employment), complete an HMRC starter checklist and choose the correct statement about your prior employment. This avoids the emergency code and ensures broadly correct deductions from day one.
What does it mean if my tax code has a minus sign?
A minus sign in a tax code is not a standard HMRC format; HMRC codes use letters to convey circumstances rather than minus signs. If you have seen a negative number in your payroll system, this may reflect your employer's payroll software displaying an internal calculation rather than the formal HMRC code. Check your P60 or personal tax account for the formal tax code, or contact your payroll department for clarification.
Can I change my tax code myself?
Tax codes are issued by HMRC; you cannot change them directly. However, you can prompt HMRC to review and change your code by updating your circumstances in your personal tax account, by submitting a self-assessment return that leads to a code adjustment, or by contacting HMRC directly to notify them of a change (for example, a change in company car, a marriage allowance transfer, or the end of a benefit). HMRC then issues the revised code to your employer. The process typically takes a few weeks.
How we verified this guide
Standard tax code structure and letter meanings were confirmed from HMRC's 'Understanding your tax code' guidance updated for 2025/26. Emergency code operation was confirmed from HMRC's PAYE guidance on emergency codes. K code and 50 percent deduction cap were confirmed from HMRC's employer PAYE guide. Underpayment collection through coding was confirmed from HMRC's Simple Assessment and coding adjustment guidance.
Primary sources
- HMRC - Tax codes guidance
- HMRC - Letters in your tax code explained
- gov.uk - Check your income tax for the current year
- MoneyHelper - What is a tax code?
- Citizens Advice - Your tax code explained
Last reviewed: May 2026.