How tax codes encode information
A UK tax code consists of:
1. Numbers: divide by 10 to get your annual personal allowance in pounds.
- 1257 = GBP 12,570 allowance (standard)
- 1100 = GBP 11,000 allowance (reduced)
- 1400 = GBP 14,000 allowance (enhanced)
2. Letter suffix: tells you the variation
- L: standard personal allowance, no variations
- M: receiving Marriage Allowance from spouse
- N: transferred Marriage Allowance to spouse
- T: complex code where personal allowance varies (e.g. Income over GBP 100K taper)
- K: NEGATIVE allowance prefix - benefits exceed your allowance
- 0T: zero allowance (no L suffix needed)
- BR: basic rate only (no number; just BR)
- D0, D1: higher rate (40%) or additional rate (45%) on all earnings
- NT: no tax
3. Optional regional prefix:
- S: Scottish rates apply (different brackets)
- C: Welsh rates apply
- No prefix: rest of UK (England, NI)
4. Optional W1/M1 suffix:
- "Week 1" or "Month 1" basis = non-cumulative
- Used when employer cannot reconcile to YTD figures
- Emergency code typically applied when starting without P45
| Reading "S1257L" | Reading "K500" (negative allowance) |
|---|---|
| S: Scottish rates apply | K: deduct (not add) from earnings |
| 1257: GBP 12,570 allowance | 500: GBP 5,000 deemed extra income (tax owed on benefits exceeding allowance) |
| L: standard | Effectively: you have NEGATIVE allowance of GBP 5,000 |
| All pay PLUS GBP 5,000 deemed amount is taxed |
Top 5 tax codes ranked
1. 1257L - the standard
- Applied to about 70% of UK workers
- GBP 12,570 personal allowance
- No variations or benefits affecting allowance
- If you see this and have ONE job + standard situation: it is correct
2. BR (Basic Rate) - typically second job
- All pay taxed at 20% basic rate
- Zero personal allowance (used on first job)
- Correct if your first job uses full allowance
- WRONG if first job is part-time or earnings under allowance
3. 0T - zero allowance, emergency
- Used when employer cannot determine your allowance (new starter, no P45)
- All pay taxed at marginal rates from GBP 0 (no personal allowance applied)
- Means significant over-withholding until corrected
- Provide P45 to employer or contact HMRC to update
4. K codes - negative allowance
- K500 = deemed extra income of GBP 5,000
- Triggered when company benefits (car, healthcare, etc.) exceed personal allowance
- Or owed back tax from prior year
- Employer adds the K-prefix amount to your taxable income
5. 1257L W1/M1 - non-cumulative emergency
- Same allowance as 1257L but applied PER PERIOD, not cumulative
- Each pay period uses 1/12 of annual allowance (or 1/52 for weekly)
- Bonus months over-tax (because no carryover of unused allowance from prior months)
- Resolved by P800 reconciliation at year-end
| Code | Meaning | Typical user |
|---|---|---|
| 1257L | Standard GBP 12,570 allowance | Most workers |
| BR | 20% on all, no allowance | Second job |
| 0T | 0% allowance (emergency) | New starter, no P45 |
| K500 | Negative GBP 5,000 allowance | Heavy company benefits |
| S1257L | Scottish rates apply | Scottish residents |
| M / N | Marriage Allowance | Married couples |
Scottish + Welsh + special codes
| Scottish residents (Scotland resident on April 6, 2025) | Welsh residents (Welsh resident on April 6, 2025) | NT (No Tax) | D0 (40% on all) | D1 (45% on all) | M and N (Marriage Allowance) |
|---|---|---|---|---|---|
| Code prefix "S": S1257L, SBR, SD0, SD1, SD2 | Code prefix "C" (for Cymru) | Foreign service workers | Used when your second job earns more than full personal allowance worth | Even rarer; for additional-rate (45%) earners with a separate second job | M: you received GBP 1,260 of allowance from your spouse. Your code is GBP 13,830 (1383M) |
| Scottish rate bands differ from rest of UK: | Welsh rates currently match rest of UK | Diplomatic staff with tax-exempt status | Rare; applied to high earners with multiple income sources | N: you transferred GBP 1,260 to your spouse. Your code is GBP 11,310 (1131N) | |
| Starter rate (19%): GBP 12,571 - GBP 14,732 | But Welsh Government can vary 10p in the pound on each band (unused so far) | Some seafarers | Marriage Allowance saves the couple GBP 252/year (transfer only goes from lower earner to basic-rate higher earner) | ||
| Basic rate (20%): GBP 14,733 - GBP 26,561 | Foreign nationals with very specific exemptions | ||||
| Intermediate (21%): GBP 26,562 - GBP 43,663 | |||||
| Higher (42%): GBP 43,664 - GBP 75,000 | |||||
| Advanced (45%): GBP 75,001 - GBP 125,140 | |||||
| Top (48%): GBP 125,141+ | |||||
| Scottish workers pay more income tax in higher bands; NI rates are the same UK-wide |
How to fix wrong tax codes
| Signs your tax code might be wrong | Who is responsible |
|---|---|
| Recently changed jobs | HMRC sets the tax code |
| Started/ended a second job | Employer applies the code as instructed by HMRC |
| Bonus or change in salary not reflected | You verify accuracy and request corrections |
| Newly receiving company benefits (car, healthcare) | |
| Personal Tax Account shows different code than payslip | |
| Significantly under- or over-withholding compared to expectation |
Fix steps:
1. Log in to your Personal Tax Account at gov.uk/personal-tax-account
2. Click "Tax code" - see current code + history
3. If wrong, click "Tell HMRC about a change to my income"
4. Provide details: started new job, salary changed, lost benefit, etc.
5. HMRC issues updated code (usually within 1-2 weeks)
6. Employer applies on next payroll
| What happens to over-withholding | What happens to under-withholding |
|---|---|
| Refunded via lower deductions in remaining pay months (if code corrected mid-year) | HMRC adjusts next year tax code DOWN to recover |
| Refunded by P800 letter after year-end if not corrected by April 5 | Or you get P800 saying "you owe tax for last year, please pay by X date" |
Contact HMRC: 0300 200 3300 (general taxpayer helpline) for complex cases. Wait time can be 30-45 minutes.
Webchat at gov.uk/personal-tax-account often faster for routine updates.
Common tax-code mistakes
- BR code on a part-time / low-earning second job. If your TOTAL income across both jobs is under GBP 12,570: BR over-withholds. Contact HMRC to split allowance.
- Marriage Allowance not applied. Lower earner must initiate at gov.uk/marriage-allowance.
- K-code surprising you. Triggered by company car or healthcare benefits exceeding allowance. Calculate the tax impact and consider if the benefit is worth it.
- 0T applied long after starting job. Should resolve within 1-2 months. If persisting, contact HMRC.
- Wrong number of digits. 1100L (GBP 11,000 allowance) instead of 1257L (GBP 12,570): GBP 314/year over-withheld. Easy to spot.
- Scottish code applied wrongly (or not applied). If you live in Scotland but tax code lacks "S," contact HMRC.
- W1/M1 persisting after P45 received. Provide P45 to employer; W1/M1 should clear within 1-2 months.
- Not checking code each tax-year start. April 6 is when new tax year codes begin. Verify your code aligns with current situation.
- Assuming employer will fix errors. Employer applies codes as told by HMRC. They are not responsible for accuracy.
- Ignoring P800 notice. HMRC sends if you over- or under-paid via PAYE. Refunds claimed via P800 reply, or via Personal Tax Account online. Failing to claim refund: lose the money.
Run the math for your situation
Use our GB calculator to plug in your own numbers.