How Tax Codes Work

Your tax code tells your employer how much income you can earn before paying tax. It appears on your payslip, P45, and P60. HMRC assigns it based on your personal allowance and any adjustments for benefits, pensions, or underpaid tax from previous years.

The most common tax code for 2025/26 is 1257L. The number 1257 is multiplied by 10 to give your personal allowance of £12,570. The letter L tells your employer that you qualify for the standard tax-free personal allowance. Your employer uses this code each pay period to work out how much tax to deduct through PAYE.

If your circumstances change (for example, you receive taxable benefits or have multiple jobs), HMRC will issue a new tax code to your employer. It is worth checking your code each April when the new tax year starts, and whenever you change jobs or your financial situation shifts.

Common Tax Code Letters

Each letter in a tax code has a specific meaning that affects how your employer calculates your tax:

L — Standard personal allowance. The most common code for employees with one job and no complications.
M — You have received a Marriage Allowance transfer from your spouse or civil partner, adding £1,260 to your personal allowance.
N — You have transferred £1,260 of your personal allowance to your spouse or civil partner through Marriage Allowance.
T — Your tax code includes other calculations to work out your personal allowance, or HMRC is reviewing your circumstances.
K — You have income that is not being taxed another way and it is worth more than your tax-free allowance. The number is added to your income rather than subtracted.
0T — Your personal allowance has been used up, or a new employer does not yet have your details.
BR — All income from this job is taxed at the basic rate of 20%. Often used for second jobs.
D0 — All income from this job is taxed at the higher rate of 40%.
D1 — All income from this job is taxed at the additional rate of 45%.
NT — No tax is deducted from this income.

Prefixes S (Scotland) and C (Wales) indicate which country's tax rates apply. For example, S1257L means you pay Scottish income tax rates with the standard personal allowance. Check our full tax code guide for more detail on how each letter works.

Emergency Tax Codes

If you see W1 or M1 after your tax code (for example, 1257L W1), it means you are on an emergency tax basis. This is also called a non-cumulative or week 1/month 1 basis. Instead of spreading your personal allowance evenly across the tax year, your employer calculates tax only on what you earn in each individual pay period.

Emergency tax codes are common when you start a new job and your employer does not yet have your P45 from your previous role. They can also appear if HMRC has not sent your correct tax code to your employer in time. While the emergency code usually gives a reasonable deduction, it can result in overpaying or underpaying tax over the year. Once HMRC issues your correct code, any overpayment should be refunded automatically through your pay.

If you have been on an emergency code for more than a couple of months, contact HMRC to check that your records are up to date. You can also update your details through your Personal Tax Account.

What To Do If Your Tax Code Is Wrong

A wrong tax code means you could be paying too much or too little tax. Signs that your code may be incorrect include a sudden change in take-home pay, receiving a code that does not match your personal allowance, or being placed on an emergency code for an extended period.

To fix it, log in to your HMRC Personal Tax Account online and check your tax code for the current year. You can see a breakdown of how your code was calculated and update your employment or income details. If something looks wrong, you can request a correction directly through the portal, or phone HMRC on 0300 200 3300.

If you have overpaid tax due to a wrong code, HMRC will usually issue a refund through your pay once the correct code is applied. For larger overpayments, you may receive a cheque or bank transfer. Use our main salary calculator to check what your take-home pay should be on the correct code, or read our complete guide to how tax codes work.