UK tax codes explained in plain English

Your tax code is the single instruction HMRC sends your employer each year: how much of your pay is tax-free, and how to tax everything above it. Most of the overpaid (and underpaid) tax in the UK starts in this little string of letters and numbers. This guide decodes all of it.

The anatomy of a code

Take the most common code in the country, 1257L. It has three possible parts:

• The numbers — your tax-free amount divided by ten. 1257 means you can earn £12,570 (the Personal Allowance) before income tax starts
• The letter — your situation. L means "standard allowance, nothing special happening"
• The prefix (if any) — S if you pay Scottish income tax rates, C for Welsh rates

If your code is 1257L and you're in England, Wales or Northern Ireland, you have the most ordinary tax position in the UK. Everyone else should read on.

The letters that matter

Code letter	What it means	Should you worry?
L	Standard Personal Allowance	No — the default
M	You received Marriage Allowance (your partner transferred allowance to you)	Only if you're no longer married
N	You gave Marriage Allowance to your partner	Only if circumstances changed
T	Other amounts need reviewing by HMRC	Mildly — check the breakdown in your tax account
BR	Basic rate (20%) on everything	Yes, if it's your main job
D0 / D1	Higher rate (40%) / additional rate (45%) on everything	Yes, if it's your main job — see our D0/D1 guide
K	You're being taxed on more than your allowance (benefits or debts being collected)	Understand it — see below
NT	No tax deducted at all	Definitely verify — this is rarely right

BR, D0, D1 and 0T: the "no allowance here" codes

BR tells payroll to charge 20% on every pound from this source. That's correct for a genuine second job or a small pension when your main income already uses the allowance — but when BR appears on your only job (a common starter mistake when there's no P45), you overpay from the first payslip.

D0 and D1 do the same at 40% and 45%; 0T removes the allowance entirely and taxes all bands as if your slice allocations were used elsewhere. All can be legitimate. All are routinely issued wrongly. For the deep dive on D0 and D1, read D0 and D1 tax codes explained.

K codes: when tax works backwards

A K code means HMRC is collecting tax on untaxed amounts through your pay — a company car, taxable medical cover, an earlier underpayment being clawed back — worth more than your Personal Allowance. K497 means an extra £4,970 of taxable value is added to your pay before rates apply. Two protections exist: payroll can never take more than half your gross pay in tax through a K code, and you can always query what the K is collecting through your Personal Tax Account.

Emergency codes: W1, M1 and the X suffix

W1 (weekly), M1 (monthly) and X all mean the same thing: "tax this payslip on its own, ignore the year so far." It's the system's panic mode when a new employer doesn't know your year-to-date figures — typically when you start without a P45 and tick the wrong starter checklist box.

The emergency basis usually overpays you... into HMRC's account. Months one and two on an emergency code often mean tax calculated as if every month were your first, with no credit for what you've already paid. HMRC normally fixes it automatically once proper data flows (the code drops its suffix and a refund washes through payroll), but if W1/M1 survives more than two or three payslips, a free call to HMRC accelerates the fix.

Scottish and Welsh prefixes

S1257L means you pay Scottish income tax rates — your allowance is the same £12,570, but above it the six Scottish bands (19% starter through 48% top) replace the UK three. C1257L means Welsh rates, which currently match England's exactly. Prefix errors happen in border towns and when people move without telling HMRC: if your prefix is wrong, your tax is wrong, and both directions are worth correcting — HMRC's address record drives it.

How your allowance splits across jobs and pensions

With two incomes, HMRC usually points the full allowance at the larger one and codes the smaller BR or D0. That's not an error — it's deliberate, and it often under-collects slightly rather than over-collect. The check that matters: only one source should carry your Personal Allowance. Fix duplicates fast, because underpayments found in next year's P800 are collected at the worst possible time.

When to definitely query your code

• The number is below 1257 and you can't see why (check the deductions list in your tax account for benefits, old debts or coded-in expenses)
• BR, D0 or 0T on your main or only job
• W1/M1 still present after three or more payslips
• A K code you can't trace to a benefit or debt
• Your prefix (S/C) doesn't match where you actually live
• You started a job with a P45 and the new code looks nothing like the old one

Querying costs nothing and routinely ends in money returned. Codes are HMRC's best guess, not gospel — the people who check theirs are the ones who get refunds.